Blue-chip stocks are known for their resilience during different economic cycles.
Their large size and long track record make them outstanding candidates to own for peace of mind.
To top it off, most blue-chip stocks also pay out a dividend, helping investors generate a useful source of passive income.
However, sentiment can sometimes lead to depressed valuations even for blue-chip stocks.
Here are three solid blue-chip stocks that we believe are too cheap to ignore.
Hongkong Land Holdings (SGX: H78)
Hongkong Land Holdings, or HKL, is a property development, management, and investment group.
The property giant owns and manages more than 850,000 square metres of prime luxury retail and commercial properties in Singapore, Hong Kong, Beijing, and Jakarta.
For 2023, the group reported an underlying net profit of US$734 million, down 5% year on year.
However, the property developer maintained its annual dividend of US$0.22 per share despite the slightly weaker results.
HKL’s net asset value (NAV) stood at US$14.49 per share as of 31 December 2023.
At the share price of US$3.42, the group is trading at just 0.24 times its book value.
HKL provided an interim management statement and business update for the first quarter of 2024 (1Q 2024).
Its underlying net profit remained the same as the corresponding period in 2023 with contributions from both investment and development properties largely unchanged.
However, the group is facing tough conditions in China where buyer sentiment towards the residential sector has deteriorated.
The attributable interest in contracted sales plunged by 36% year on year with profit margins also impacted by reduced sale prices across many projects.
Management is taking an extensive review of these projects and HKL will incur a non-cash impairment charge of US$200 million to US$300 million for the first half of 2024 (1H 2024).
Over in Hong Kong, leasing demand was negatively impacted by uncertainty in global markets with physical committed vacancy coming in at 6.6%.
Rental reversions also continue to be negative.
The bright spot is Singapore, where rental reversions are positive because of tight supply and a flight to quality.
Committed physical vacancy remained low at just 1% compared with 0.9% at the end of 2023.
Genting Singapore (SGX: G13)
Genting Singapore owns and operates the integrated resort (IR) at Resorts World Sentosa (RWS).
The IR features six hotels with around 1,600 hotel rooms, a casino, one of the world’s largest aquariums (S.E.A. Aquarium), a Universal Studios Singapore (USS) theme park, and numerous dining, retail, and entertainment options.
2023 saw a 40% year-on-year jump in revenue for the IR operator to S$2.4 billion as air travel and tourism recovered with a bang.
The group’s net profit shot up 80% year on year to S$611.6 million.
The business also generated a positive free cash flow of S$627.1 million last year.
For 1Q 2024, Genting Singapore has carried on the momentum with a 62% year on year surge in revenue to S$784.4 million.
Net profit for the quarter came in at S$247.4 million, up 92% year on year from S$129.2 million.
Despite the strong performance, shares of Genting Singapore have fallen nearly 12% year to date.
The IR operator is trading at an attractive trailing 12-month price-earnings ratio of just 14.7 times.
Genting Singapore recently signed a memorandum of understanding with Sentosa Development Corporation, DBS Group (SGX: D05), and Singapore Tourism Board to establish the Sentosa Precinct Partnership.
Such a collaboration should increase the appeal of RWS in the future.
In line with the group’s plans for RWS 2.0, construction works for the new Minion Land attraction in USS, the Singapore Oceanarium, and the Central Lifestyle Connector remain on track.
These new attractions will open in phases from 1Q 2025.
City Developments Limited (SGX: C09)
City Developments Limited, or CDL, is a global real estate firm with a network spanning 163 locations in 29 countries and regions.
The group’s diverse portfolio includes residences, offices, hotels, serviced apartments, retail malls, and integrated developments.
CDL posted a record revenue of S$4.9 billion for 2023, up 50% year on year, largely due to the strength of its property development division.
The property giant’s core net profit quadrupled year on year to S$188.6 million.
CDL’s net asset value stood at S$10.12 as of 31 December 2023, meaning its shares are trading at a price-to-book ratio of just 0.54 times.
The group is advancing on its GET strategy, which stands for “Growth, Enhancement, and Transformation”.
Just last month, CDL concluded the acquisition of the Hilton Paris Opera Hotel to boost the group’s recurring income.
Its recent 1Q 2024 business update also sounded promising.
The group and its associates sold 429 units in Singapore, reaping sales proceeds of S$736.8 million.
This performance was significantly better than the 88 units sold for S$213.2 million in the previous corresponding period.
Another two residential projects are slated for launch in 2H 2024.
Its Singapore office property portfolio also boasted a high occupancy rate of 91.1% along with the group’s flagship Republic Plaza office asset reporting a positive rental reversion of 8.6% for the quarter.
Its Singapore retail portfolio enjoyed a committed occupancy of 97.7%, higher than Singapore’s retail occupancy of 93.3% as of 31 March 2024.
CDL will also invest S$50 million in an asset enhancement initiative to spruce up the 15-year-old City Square Mall with full completion expected in 1H 2025.
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Disclosure: Royston Yang owns shares of DBS group.
