Over the long run, share prices are a function of the earnings potential of a company and its ability to generate free cash flow.
This means that as a business churns out higher levels of profits and cash flow, it becomes more valuable, and investors will bid higher prices for a piece of the company.
Hence, holding on to such a business over the long term will enable you to enjoy attractive capital gains that will lift your portfolio to greater heights.
The key is to study the underlying business to determine which can sustainably grow their earnings over the long term.
Here are four Singapore companies that recently reported higher profits that you can add to your buy watchlist.
Keppel Ltd (SGX: BN4)
Keppel is a global asset manager that provides sustainability-related solutions in infrastructure, real estate, and connectivity.
The blue-chip group reported a mixed result for 2024 with revenue dipping by 5.2% year on year to S$6.6 billion.
Both the Infrastructure and Real Estate segments saw year-on-year revenue declines while Connectivity division’s revenue stayed flat year on year.
However, net profit from continuing operations was 5% higher year on year at S$1.06 billion.
The higher profit was driven by a sharp 54% year-on-year increase in asset management fees to S$436 million for 2024.
The asset manager declared a final dividend of S$0.19, unchanged from a year ago.
For 2024, the total dividend came up to S$0.34 per share, in line with 2023’s dividend.
Keppel also saw an acceleration in the growth of its funds under management (FUM) to S$88 billion by end 2024, up from just S$55 billion in the previous year.
The group intends to drive organic growth to achieve its FUM target of S$200 billion.
Keppel has also monetised S$7 billion of assets since October 2020, including S$1.5 billion alone in 2024.
The group’s return on equity now stands at 10.1%, up from just 7.9% back in 2022.
iFAST Corporation (SGX: AIY)
iFAST is a financial technology firm that operates a platform for the buying and selling of a wide variety of unit trusts, equities, and bonds.
For 2024, net revenue jumped 53.6% year on year to S$248.4 million.
Operating profit soared 127.8% year on year to S$84.6 million while net profit more than doubled year on year to S$66.6 million.
The group’s assets under administration (AUA) also climbed 26.2% year on year to a record high of S$25.01 billion, boosted by net inflows of S$3.3 billion for 2024.
In line with the good results, iFAST declared a final dividend of S$0.016, up from the previous year’s S$0.014.
The group’s digital bank division also achieved its first-ever quarter of profitability as customer deposits crossed the S$1 billion level for the first time.
Looking ahead, iFAST expects to continue to grow the AUA for its wealth management platform business.
Onboarding continues to progress with its Hong Kong ePension business which should see higher revenue for 2025, while the digital bank division should see a full year of profitability this year.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The group reported a strong set of earnings for the first half of fiscal 2025 (1H FY2025) ending 31 December 2024.
Net revenue jumped 15.6% year on year to S$646.4 million.
Net profit, excluding exceptional items, leapt 27.3% year on year to S$320.1 million.
In tandem with the good results, SGX upped its quarterly dividend by S$0.005 to S$0.09.
The group’s foreign exchange platform saw a sharp 40% year-on-year increase in daily average volume (DAV).
Over at equity derivatives, SGX is seeing a rise in the global usage of its range of derivatives following China’s economic stimulus measures.
Management is confident of growing its dividend per share by mid-single-digits year on year in the medium term.
It is also optimistic about achieving its target of 6% to 8% revenue growth per annum in the medium term.
Fraser & Neave (SGX: F34)
Frsaser and Neave, or F&N, is a food and beverage manufacturer and seller with popular brands such as Magnolia, 100-Plus, and Seasons Tea.
For the first quarter of fiscal 2025 (1Q FY2025) ending 31 December 2024, F&N saw revenue rise 16.3% year on year to S$618 million.
Net profit improved by 18.8% year on year to S$52 million.
Soft drinks revenue grew because of a favourable sales mix coupled with higher volumes.
Dairies division also saw growth, supported by better domestic and export demand in Indochina.
The group launched a new product F&N Sparkling Zero in grapefruit, peach and lemon flavours during 1Q FY2025.
F&N also released a limited-edition festive pack for its grape, orange, and ice cream soda drinks in 325 ml cans for the recent Chinese New Year celebrations.
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Disclosure: Royston Yang owns shares of iFAST Corporation and Singapore Exchange Limited.
