It is a well-known fact that companies with growing profits also see their share prices rise in tandem.
Investors are eager to buy into companies with rising profits as these higher profits make the business more valuable.
Of course, you also need to determine if such increases are sustainable and whether the company can continue to improve its profitability over time.
A one-off net profit boost gives a temporary boost to the business but may make it a value trap in the long term.
Here are four Singapore stocks that recently reported higher profits that you may wish to include in your buy watchlist.
Civmec Ltd (SGX: P9D)
Civmec is an integrated, multi-disciplinary construction and engineering services provider to the energy, resources, infrastructure, and marine & defence sectors.
The group is headquartered in Australia and its core capabilities include heavy engineering, shipbuilding, and site civil works, among others.
Civmec released a business update for its fiscal 2024 first quarter (1Q FY2024) ending 30 September 2023.
The group’s revenue rose 7.3% year on year to A$245.1 million with net profit climbing a similar percentage year on year to A$15.2 million.
The business also saw its operating cash flow jump nearly five-fold year on year from A$8.2 million to A$40.1 million for 1Q FY2024.
Civmec’s order book also rose 17.9% year on year to A$1.1 billion.
Management maintains a positive outlook as it sees increased transparency for clients’ work pipelines, enabling the group to increase client interactions.
There is also a significant jump in awards of long-term agreements for the supply of maintenance services, which help to build up Civmec’s recurring income stream.
The group has also lodged its building planning approval for the facility development at Gladstone.
SIA Engineering Co Ltd (SGX: S59)
SIA Engineering, or SIAEC, provides aircraft maintenance, repair and overhaul (MRO) services to airlines.
The group reported an impressive set of earnings for the first half of fiscal 2024 (1H FY2024) ending 30 September 2023.
With the increase in air travel activity, revenue for 1H FY2024 jumped nearly 42% year on year to S$514 million.
Net profit surged 82.5% year on year to S$59.3 million.
SIAEC also declared an interim dividend of S$0.02.
As of September 2023, the total flights handled by SIAEC hit 89% of pre-COVID levels.
The group intends to establish hangars regionally and expand its network to increase its presence in new markets.
At the same time, the MRO specialist will deepen its collaboration with parent Singapore Airlines (SGX: C6L) to secure more original equipment manufacturing opportunities.
It also intends to diversify its customer portfolio to achieve operating resilience.
Great Eastern Holdings Ltd (SGX: G07)
Great Eastern Holdings, or GEH, is an insurance company and a subsidiary of OCBC Ltd (SGX: O39) with over S$100 billion in assets and more than 15 million policyholders.
The group also operates in Indonesia and Brunei in addition to Singapore.
For the third quarter of 2023 (3Q 2023), GEH saw total weighted new sales inch up 5% year on year to S$419.4 million.
New business embedded value, however, slipped by 8% year on year to S$183.7 million.
However, net profit for the quarter jumped 21% year on year to S$180.2 million.
For the first nine months of 2023, GEH’s net profit soared 65% year on year to S$617.4 million, driven by higher profit for its Singapore Life business along with positive investment performance in its shareholders’ fund.
In Singapore, the group has inked an exclusive insurance partnership with the Yuu Rewards Club loyalty programme offered by DFI Retail Group (SGX: D01) to distribute life and general insurance products to the base of more than one million members.
Looking ahead, the group has entered into an agreement to acquire AmMetLife Insurance and AmMetLife Takaful which are subject to regulatory approval.
If approved, these acquisitions will increase GEH’s customer base by around three million.
Sheng Siong Group (SGX: OV8)
Sheng Siong is one of the largest supermarket chains in Singapore with 69 outlets across the island.
The retailer sells a wide variety of products ranging from live and chilled produce to toiletries and essential household items.
For 3Q 2023, Sheng Siong reported a 3.7% year on year increase in revenue to S$345.8 million.
Gross profit improved by 6.9% year on year with gross margin hitting 30.3%, up from 29.4% a year ago.
Net profit climbed 5.7% year on year to S$34.8 million.
The group saw two new stores opened in 9M 2023 and aims to open at least three new stores per year.
It recently snagged a tender for an HDB shop unit with three tenders awaiting results.
Management expects five more units to be put up for tender in the next six months, giving the retailer ample opportunities to increase its Singapore store base.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.