Earnings season is around the corner.
As investors sit back and digest the latest financial updates from the companies they own, all eyes will focus on the crop of blue-chip stocks.
The reason is simple.
Blue-chip stocks are well-known for their resilience and track record, hence their earnings will set the tone for many other businesses.
We highlight three blue-chip stocks that look poised to report higher profits during the upcoming earnings season.
DBS Group (SGX: D05)
DBS is Singapore’s largest bank by market capitalisation.
The lender provides a range of banking, insurance, and investment services to corporations and individuals.
DBS reported a sparkling set of results for its third quarter 2023 (3Q 2023) earnings.
For the first nine months of 2023 (9M 2023), total income grew 27% year on year to S$15.2 billion on the back of a 46% year-on-year jump in net interest income.
Net profit climbed 33% year on year to S$7.8 billion.
The bank hiked its quarterly dividend by 33% year on year to S$0.48, bringing its annualised dividend to S$1.92 per share.
CEO Piyush Gupta believes that the higher-for-longer interest rates will support the group’s net interest margin.
He did, however, warn that this may come at the expense of loan growth.
Fee income should be supported by wealth management and credit card spending.
2024’s net profit is expected to be maintained around 2023’s record level, implying that the fourth quarter of 2023 should see a strong set of results on a year-on-year basis.
DBS will release its full-year results on the morning of 7 February.
Elsewhere, the bank also announced last month that it has obtained regulatory approvals to increase its existing stake in Shenzhen Rural Commercial Bank Corporation from 13% to 16.69%.
This transaction will cost DBS around S$376 million and be funded by internal resources and will be immediately accretive to the group’s net profit and return on equity.
Genting Singapore (SGX: G09)
Genting Singapore owns and operates the integrated resort (IR) at Resorts World Sentosa (RWS).
RWS features six hotels with around 1,600 hotel rooms, a casino, one of the world’s largest aquariums, a Universal Studios theme park, and a wide selection of dining, retail, and entertainment options.
Genting Singapore is benefitting from a sharp surge in tourists as borders reopened in 2023.
Revenue for 1Q 2023 stood at S$484.5 million and increased to S$595.9 million in 2Q 2023 and S$689.9 million in 3Q 2023.
Net profit has also increased in tandem, going from S$129.2 million in 1Q 2023 to S$216.3 million in 3Q 2023.
If the group can keep up this momentum, it will report a significantly higher net profit for the fourth quarter of 2023 as 4Q 2022’s net profit came in at just S$119.9 million.
There are indications that this could happen.
Global air travel volume is rising and is expected to finally exceed pre-COVID-19 levels this year, giving Genting Singapore’s business a strong tailwind.
For 2022, Genting Singapore doubled its final dividend to S$0.02 on the back of stronger results.
There is a chance the group could up its dividend again when it reports its results on 22 February.
Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6)
Yangzijiang Shipbuilding, or YZJ, is one of the largest private shipbuilding companies in China.
The group owns four shipyards in Jiangsu province that can manufacture a broad range of commercial vessels such as large containerships, bulk carriers, and oil tankers.
The shipbuilder reported strong order win momentum for 9M 2023 that resulted in a record-high order book of US$14.8 billion as of 30 September 2023.
Total order wins of US$6.5 billion were secured in 9M 2023, more than double YZJ’s original goal.
Its order book now contains 184 vessels to be delivered between 2023 to 2028, with the vast majority (US$9.8 billion) belonging to containerships.
There is a direct correlation between YZJ’s order book and its revenue and net profit.
For the first half of 2023, the group saw revenue rise 16% year on year to RMB 11.3 billion while net profit jumped 47% year on year to RMB 1.7 billion.
With a record order book, there is a high chance the shipbuilder can report higher revenue and profits for 2023.
YZJ’s order book win momentum has not slowed.
Just last week, the group secured orders for six units of 13,000 TEU methanol dual-fuel containerships to be delivered from 2027 onwards.
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Disclosure: Royston Yang owns shares of DBS Group.
