Some businesses are enjoying their time in the sun as they report strong results for 2023.
The better results came about due to a combination of factors such as higher interest rates, improved consumer sentiment, a surge in demand for air travel, and successful business development initiatives.
Investors are, however, keeping an eye out on the future as higher earnings will determine the trajectory of the stock’s share price.
We profile four Singapore companies that are well-positioned to report better profits that should cause their share prices to rise in tandem.
DBS Group (SGX: D05)
DBS needs no introduction as it is Singapore’s largest bank by market capitalisation.
The lender reported a strong set of earnings for 2023 as high interest rates boosted its net interest income.
Total income jumped 22% year on year to S$20.2 billion while operating profit climbed 29% year on year to S$12.1 billion.
The bank reported a record net profit of S$10 billion for 2023, up 23% year on year.
A quarterly dividend of S$0.54 was declared, up 26% from the S$0.42 paid out a year ago.
DBS also declared a 1-for-10 bonus issue with the bonus shares also qualifying for the same amount of dividend per share.
For 2024, CEO Piyush Gupta has maintained guidance for net interest income to be around 2023 levels.
The US Federal Reserve also held rates steady and is signalling three rate cuts for the remainder of this year once it has greater confidence that inflation is heading down to 2%.
He also expects DBS’s fee income growth to be in the double-digit range.
Should these come to pass, it will imply that DBS can continue to grow its net profit for 2024.
Sembcorp Industries Ltd (SGX: U96)
Sembcorp Industries, or SCI, is an energy and urban solutions provider with a balanced energy portfolio of 21.3 GW and a project portfolio spanning more than 14,000 hectares across Asia.
The blue-chip group reported a mixed set of results for 2023 that saw revenue dip 10% year on year but profit excluding exceptional items surge by 38% year on year to S$1 billion.
A final dividend of S$0.08 was declared, bringing 2023’s total dividend to S$0.13.
SCI continues to work on building its renewables portfolio, a goal that it communicated during its recent Investor Day.
It aims to grow its renewables capacity from 13.8 GW as of February 2024 to 25 GW by 2028.
The utility specialist is advancing on its strategy with the award of a 440 MW wind-solar hybrid power project in India earlier this month.
With this project, its gross renewables capacity will now increase to 14.3 GW.
With more power purchase agreements and higher revenues flowing from its renewables portfolio, SCI looks poised to deliver a better set of earnings this year.
Straco Corporation Limited (SGX: S85)
Straco is an operator of tourism assets in both China and Singapore.
Its key properties include the Shanghai Ocean Aquarium (SOA) and Underwater World Xiamen (UWX), both in China, along with the Singapore Flyer, a giant observation wheel located in Singapore.
2023 saw a sharp recovery for Straco as China’s borders reopened and an influx of tourists from the Middle Kingdom arrived in Singapore.
Revenue last year more than doubled year on year to S$82.1 million with the tourism operator generating a net profit of S$25.7 million, reversing the net loss a year ago.
A final dividend of S$0.015 along with a special dividend of S$0.005 were declared, taking 2023’s dividend to S$0.02.
The China Tourism Academy estimates that domestic tourism will experience remarkable growth this year, with Shanghai launching a “Visit Shanghai” campaign to boost domestic tourism.
Singapore’s economy is also recovering with a surge in flights to the city-state along with numerous rock concerts being held in the country.
These two factors should see Straco reporting stronger financial numbers for 2024 as higher numbers of tourists visit both China and Singapore.
Centurion Corporation (SGX: OU8)
Centurion owns, develops and manages purpose-built worker accommodation (PBWA) and student accommodation (PBSA) assets in Singapore, Malaysia, the US, and the UK.
Its portfolio comprises 34 properties totalling around 67,377 beds as of 31 December 2023.
The group reported a stellar set of earnings for 2023 with revenue growing by 15% year on year to S$207.2 million.
Net profit from core business operations climbed 21% year on year to S$69.2 million.
A final dividend of S$0.015 was declared, taking 2023’s total dividend to S$0.025.
This total dividend was 150% higher than the S$0.01 paid out for 2022.
Centurion plans to develop a new PBWA at Westlite Ubi that will be completed in December this year and help to add 1,650 beds.
The redevelopment of Block 14 at Toh Guan is also in progress and should be completed by 2026, adding another 1,764 beds.
For its UK PBSA, Centurion has completed asset enhancement initiatives to convert cluster apartments into ensuite format, single, or studio rooms.
This steady increase in both PBWA and PBSA should stand the group in good stead to steadily increase its earnings.
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Disclosure: Royston Yang owns shares of DBS Group.
