Growth in profits and cash flows drives stock prices higher over time, yielding attractive capital gains for patient investors.
Investors should keep their eyes peeled on business developments that can help to drive revenue and boost profits.
Such catalysts can be in the form of contracts secured, agreements signed, an acquisition, or an inked partnership.
Over time, these businesses may also pay out higher dividends as their cash flow improves, translating into a double bonus for investors.
Here are four stocks with recent business developments that should make you include them in your July buy watchlist.
CapitaLand Ascott Trust (SGX: HMN)
CapitaLand Ascott Trust, or CLAS, is a hospitality trust with a portfolio of 102 properties with more than 18,000 units across 16 countries in Asia Pacific.
CLAS’s assets under management stood at S$8.5 billion as of 31 March 2024.
The hospitality trust announced that it acquired the remaining 10% stake in Standard at Columbia, a freehold student accommodation property in South Carolina, USA.
This property was 90%-acquired in phases over three years, with the initial investment by CLAS to own a 50:50 stake in a joint venture with its sponsor, The Ascott Limited, for a 90% share.
CLAS subsequently bought out its sponsor’s stake in this property in November 2022.
The earnings before interest, taxes, depreciation and amortisation (EBITDA) yield on the total development cost is projected to be around 7%, which is higher than the 6.2% estimated back in 2021.
Standard at Columbia has 678 beds and serves more than 35,000 graduate and undergraduate students from the University of South Carolina.
The property turned operational in August 2023 and has an occupancy rate exceeding 90%.
For the upcoming academic year 2024/2025, the pre-leasing occupancy rate has hit 99% as of end-May and has achieved a positive rental reversion of 4% compared with the previous academic year.
Singtel (SGX: Z74)
Singtel is Singapore’s largest telecommunication company (telco) and offers a range of mobile, broadband, and pay-TV services.
The blue-chip group made two significant announcements last month.
The first was the signing of a definitive agreement with KKR and ST Telemedia Global Data Centres (STT GDC) to allow a consortium comprising Singtel and KKR to invest S$1.75 billion in STT GDC.
CFO of Singtel, Arthur Lang, commented that digital infrastructure is a growing asset class and the sector will see growth driven by rapid digitalisation and the adoption of artificial intelligence around the world.
This investment allows Singtel to gain exposure to an established platform as STT GDC is one of the fastest-growing data centre providers in the world with a portfolio of 95 data centres across 11 geographies.
The second announcement involves a partnership between Nxera, Singtel’s region data centre arm, and TM, Malaysia’s leading telco and digital technology group.
A joint venture will be set up to develop data centres in Malaysia starting with a sustainable, AI-ready data centre campus in Johor.
The initial capacity of this data centre is 64 MW but can be scaled up to 200 MW if demand stays strong.
Seatrium (SGX: 5E2)
Seatrium provides engineering solutions to the global offshore, marine, and energy industries.
The group has an established 60-year track record in the design and construction of oil rigs, floaters, offshore platforms, and specialised vessels.
On 5 June, Seatrium was awarded a Letter of Intent (LOI) by BP to provide services for engineering works pending the finalisation of a contract for engineering, procurement, construction and commissioning work for a floating production unit (FPU).
The LOI is part of the Kaskida Project, which is a greenfield development located around 250 miles southwest of New Orleans within the Gulf of Mexico.
A week later, the group and GE Vernova (NYSE: GEV) announced the award of a third contract by TenneT TSO B.V. (TenneT) for the construction of a two GW high voltage direct current (HVDC) electric offshore transmission system in the Netherlands.
This contract is part of a five-year framework cooperation agreement signed with TenneT and announced by a consortium comprising Seatrium and GE Vernova back in March last year.
Construction is slated to commence in June 2024 with commissioning expected by 2031.
Sembcorp Industries (SGX: U96)
Sembcorp Industries, or SCI, provides sustainable solutions to support energy transition and urban development.
The group has a balanced energy portfolio of 21.2 GW across 10 countries.
SCI has signed a Heads of Terms with Sojitz Corporation (TYO: 2768) and Kyushu Electric Power Co (TYO: 9508) to finalise a definitive green ammonia offtake agreement.
The group will be the lead developer and operator of this project and will use renewable energy to produce an initial 200,000 metric tonnes per annum of green ammonia in India.
Just last week, SCI secured long-term power purchase agreements (PPAs) with subsidiaries of global pharmaceutical company GSK plc (LON: GSK).
Under these PPAs, Sembcorp Power, a wholly-owned subsidiary of the group, will supply up to 10 MW of electricity to three of GSK’s manufacturing sites in Singapore.
These PPAs have tenures of up to 10 years and will commence on 1 January 2025.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
