Investors should remember that share prices are ultimately driven by higher profits and cash flows that a business generates.
Hence, if you are looking for steady capital appreciation, you should look for businesses that can consistently increase both their profits and cash flow.
The bonus is that with a stronger business performance, such businesses will also pay out higher dividends, allowing you to enjoy a larger stream of passive income.
A good place to start looking for investment ideas is blue-chip companies as they have a longer track record of performance and are reputable names within their respective industries.
We feature four blue-chip stocks that look poised to report a higher profit for 2024.
Genting Singapore (SGX: G13)
Genting Singapore is the owner and operator of the integrated resort (IR) at Resorts World Sentosa (RWS).
RWS spans 49 hectares and contains attractions such as Universal Studios Singapore (USS), a casino, eight luxury hotels, and a variety of dining and entertainment options.
For its third quarter 2023 (3Q 2023) business update, Genting Singapore posted a 33% year-on-year jump in total revenue to S$689.9 million because of the sustained recovery in travel and tourism.
Net profit for 3Q 2023 surged by 59% year on year to S$216.3 million.
During its half-year results announcement, the IR operator’s net profit more than tripled year on year to S$276.7 million with the interim dividend increased by 50% year on year to S$0.015.
There could be more to come from the group.
Singapore Tourism Board forecasts that the tourism sector should recover to pre-pandemic levels by 2024 after reporting 6.3 million visitors in 2022.
Over at Singapore Airlines Limited (SGX: C6L), capacity is expected to reach 92% of pre-pandemic levels in December 2023.
The airline is targeting to return to pre-COVID capacity in 2024.
These signs point to increased tourism flowing in for next year, thus benefitting Genting Singapore and putting it in a great position to report increasing profits.
Singapore Technologies Engineering (SGX: S63)
Singapore Technologies Engineering, or STE, is a technology, engineering and defence group that serves clients in the aerospace, smart city, defence, and public security sectors.
During its third quarter 2023 (3Q 2023) business update, STE saw its revenue rise by 9% year on year to S$2.4 billion.
For the first nine months of 2023 (9M 2023), the engineering conglomerate saw revenue growth across all its three segments.
The group snagged contract wins of S$11.7 billion for 9M 2023 with slightly more than half of the contract wins centred on the Defence & Public Security segment.
As of 30 September 2023, STE’s order book stood at S$27.5 billion, of which S$2.5 billion will be delivered in the remainder of 2023.
This means that the group still has S$25 billion of contracts to be recognised as revenue in 2024 and beyond.
STE has also undertaken capacity expansion initiatives to position the group for more growth, such as acquiring a brownfield site at Gul Yard for its ship repair business and investing in airframe maintenance hangars in Changi for its maintenance, repair and overhaul business.
Investors should also remember that STE’s acquisition of TransCore should help to add to earnings for 2024 too.
Keppel Ltd (SGX: BN4)
Keppel is an asset manager with three core divisions – infrastructure, real estate, and connectivity.
For 9M 2023, Keppel reported higher year-on-year revenue and net profit led by stronger performances by the Infrastructure and Connectivity segments.
The group also saw increased activity across its fund management and investment platforms.
Total acquisitions of around S$1.7 billion were made in 9M 2023 and should contribute to Keppel’s top and bottom lines next year.
The group also saw cumulative asset monetisation of S$5.3 billion since October 2020 which will help the asset manager to recycle funds into higher-yielding assets with better performance.
Keppel is advancing its asset-light strategy in urban solutions by leveraging local partners in China to invest in good projects there.
Finally, the group is also working on growing its funds under management to enjoy recurring asset management fees.
These fees totalled S$178 million for 9M 2023.
Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6)
Yangzijiang Shipbuilding, or YZJ, is one of the largest private shipbuilders in China.
The group enjoyed strong order win momentum and snagged US$6.5 billion of orders in 9M 2023, more than double its target.
The group is on track to deliver its target of 57 vessels with 42 already delivered in 9M 2023.
YZJ also reported a record-high order book of US$14.8 billion as of 30 September 2023.
The shipping industry is pushing for accelerated fleet decarbonisation which should boost the fleet replacement cycle for YZJ’s clients, giving it more opportunities to snag contracts in 2024.
Its burgeoning order book should also translate into significantly higher revenue and earnings for next year.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.