Interest rates soared dramatically higher back in 2022 in what was described as one of the fastest rate hike exercises in history.
Two years on, investors are faced with the prospect of a “higher for longer” interest rate environment as the US economy stays healthy and inflation seems to be heading towards the 2% level.
One effective way to avoid worries over interest rates is to pick stocks that have zero debt.
Of course, it’s also important that such companies have healthy growth prospects that makes them attractive investment candidates.
We introduce four Singapore stocks that have no debt and look well-positioned to do well next year.
Sheng Siong (SGX: OV8)
Sheng Siong is a supermarket chain with 74 outlets across Singapore that are located in the heartland areas.
The group provides a wide assortment of merchandise and offers over 1,650 products under its 24 house brands.
Sheng Siong reported an impressive financial result for the first nine months of 2024 (9M 2024).
Revenue rose 4% year on year to S$1.1 billion while gross profit increased by 6% year on year to S$328.8 million.
Gross margin improved from 29.9% in 9M 2023 to 30.5% in 9M 2024.
Net profit came in at S$109 million, up almost 9% year on year.
The retailer reported a clean balance sheet with S$350.1 million of cash and no debt as of 30 September 2024.
Sheng Siong also generated a positive free cash flow of S$141.3 million for 9M 2024, 13% higher year on year.
Four new stores were opened in 9M 2024 and the group plans to open at least three new stores per year.
The supermarket operator has put in a bid for more shop spaces and four are awaiting tender results.
There is one more tender to be put up in the fourth quarter of 2024 (4Q 2024).
Prospects look good for Sheng Siong as it looks well-positioned to fulfil its store opening target even as gross margins continue climbing.
Valuetronics Holdings (SGX: BN2)
Valuetronics is an integrated electronics manufacturing services (EMS) provider that has two principal business segments – Consumer Electronics (CE) and Industrial and Commercial Electronics (ICE).
The group released a mixed set of earnings for the first half of fiscal 2025 (1H FY2025) ending 30 September 2024.
Revenue fell by 3.3% year on year to HK$862.1 million, dragged down by a 17.6% year-on-year decline in revenue from the CE division.
Operating profit, however, edged up 3.7% year on year to HK$94.7 million.
With reduced income tax expenses, net profit managed to climb 10.2% year on year to HK$90.5 million.
The EMS provider declared an interim dividend of HK$0.04 and special dividend of HK$0.04, bringing its total dividend to HK$0.08 for this round of results.
The Hong Kong-based company also had a robust balance sheet with HK$1.17 billion of cash and no debt.
Valuetronics is allocating more resources to newly-acquired customers with higher growth potential and better margins.
Its ICE division should also see revenue driven by new customers and improvements in the group’s supply chain, along with the depreciation of the renminbi, should add to further gains in its gross margin.
PropNex Ltd (SGX: OYY)
PropNex is an integrated real estate services group with 12,700 sales professionals.
The group offers real estate brokerage, training, and real estate consultancy services and has a presence in Singapore, Malaysia, Vietnam, Cambodia, and Australia.
PropNex reported a downbeat set of earnings for the first half of 2024 (1H 2024).
Revenue dipped by 5.1% year on year to S$345.6 million while net profit tumbled nearly 14% year on year to S$19 million.
The weak financial numbers were attributed to limited new property launches and the government’s property cooling measures.
Despite the lower profit, PropNex maintained a clean balance sheet with S$116.4 million of cash and zero debt.
The business also generated a healthy positive free cash flow of S$16.1 million for 1H 2024.
An interim dividend of S$0.0225 per share was paid out, slightly lower than the S$0.025 paid a year ago.
The projected increase in the number of new launches in the second half of this year, along with an anticipated 4% to 5% increase in overall private property prices, should act as good catalysts for the business in 2025.
HRNetGroup (SGX: CHZ)
HRNetGroup is a recruitment firm with over 900 consultants across 17 Asian cities.
Some of the brands under the group include HRnetOne, Recruit Express, and PeopleSearch.
Like PropNex, HRNetGroup also reported a downbeat performance as the business experienced weak hiring across the regions it operates in.
Revenue slid 3% year on year to S$285.9 million for 1H 2024 while gross profit fell nearly 12% year on year to S$63 million.
Net profit came in 23.1% lower than a year ago at S$22.8 million.
Despite the lower profits, HRNetGroup maintained a clean balance sheet with S$246.8 million of cash and zero debt.
The human resources company generated a positive free cash flow of S$17.2 million and also declared an interim dividend of S$0.0187, unchanged from the prior year.
The group has unveiled co-working hubs in Kuala Lumpur and will transform its Shanghai office next into such a hub.
It also introduced Crew, a regional platform that provides manpower supply and workforce solutions to businesses.
With Singapore set to report GDP growth of between 1% to 3% in 2025 and China vowing to “ramp up moves” to spur economic growth next year, the future looks bright for HRNetGroup.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
