Tough times don’t last; tough companies do.
The saying above reminds us that it is normal to encounter challenging economic conditions from time to time.
Right now, the economy has been hit by a combination of high inflation and surging interest rates.
However, despite the headwinds, solid companies can ride out these challenges and still emerge relatively unscathed.
Blue-chip stocks can weather such harsh times much better than smaller, lesser-known companies.
When the rough seas pass and the sun emerges again, these stocks can go on to build on their strengths to garner new achievements in revenue and profits.
We shine the spotlight on three blue-chip stocks that chalked up impressive double-digit share price gains this year.
You may be curious to know if they can continue to perform well for the rest of 2023.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is one of several blue-chip REITs within the benchmark Straits Times Index (SGX: ^STI).
The REIT’s portfolio comprises 23 data centres across nine countries worth S$3.7 billion as of 31 March 2023.
Shares of the data centre REIT have risen by 15.6% year-to-date (YTD), giving the REIT a market capitalisation of S$3.56 billion.
Keppel DC REIT reported a commendable set of earnings for its fiscal 2023’s first quarter (1Q 2023).
Its distribution per unit (DPU) rose 3% year on year to S$0.02541 for the quarter from contributions from acquisitions, rental escalations, and asset enhancement initiatives.
The REIT also enjoys a very high occupancy rate of 98.5% as of 31 March 2023 along with a long portfolio weighted average lease expiry (WALE) of 8.2 years.
This long WALE provides healthy income visibility for unitholders and the REIT manager has also communicated that more than half the portfolio’s leases have built-in rental escalations based on the consumer price index.
These clauses, along with the manager’s continued pursuit of yield-accretive acquisition opportunities, should provide confidence that the REIT’s DPU can continue its upward climb.
Moreover, data centre demand looks robust as it will be driven by long-term trends such as cloud computing, generative artificial intelligence, and machine learning.
Such trends bode well for Keppel DC REIT as it ensures continued strong demand for its data centres.
Singapore Airlines Limited (SGX: C6L)
Singapore Airlines, or SIA, is Singapore’s flagship airline.
The group operates 195 aircraft as of 31 March 2023 and its passenger network covers 109 destinations in 36 countries and regions.
Shares of the carrier have risen by 14.4% YTD and are now trading at close to their 52-week high of S$6.38.
Just last week, SIA released a sterling set of earnings for its fiscal 2023 (FY2023) ending 31 March 2023.
The airline reported its highest-ever profit in its 76-year history of close to S$2.2 billion.
In line with the strong numbers, SIA declared a final dividend of S$0.28, taking the total FY2023 dividend to S$0.38.
Looking ahead, the group intends to redeem 50% of the Mandatory Convertible Bonds issued in 2021 by June 2023, indicating that it has the financial resources to do so.
Through fleet expansion, SIA targets that it should have 201 aircraft by the end of FY2024.
China’s reopening should also benefit the airline for the rest of this calendar year.
In addition, SIA is also enhancing customer loyalty through its KrisFlyer program and saw increased revenue compared with FY2020 as the number of members jumped 44% to 6.7 million over the same period.
Sembcorp Industries (SGX: U96)
Sembcorp Industries, or SCI, is an energy and urban solutions provider with a balanced energy portfolio of 18.5 GW and a project portfolio spanning over 12,000 hectares across Asia.
Shares of the blue-chip utility group have shot up 42.2% YTD and are now trading at close to their 52-week high of S$4.93.
SCI reported a stellar set of earnings for 2022 as it tripled its net profit and declared a special dividend of S$0.04.
The utility giant is hard at work building up its renewables portfolio, with the award of its first greenfield renewables project in the Sultanate of Oman back in March 2023.
The 500 MW solar plant will be completed by 2025 and will be backed by a 20-year power purchase agreement.
Its Urban Development division has signed a memorandum of understanding with nine provinces in Vietnam to develop smart and sustainable business parks.
More recently, SCI announced that it will develop a new multi-utilities centre on Jurong Island, with construction commencing in the second half of 2023.
The centre is expected to be fully operational by 2026.
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Disclosure: Royston Yang owns shares of Keppel DC REIT.
