When we look back at 2020, it is probably best described as a year to forget.
As the year fades into our rearview mirror, it’s a good time to think of the businesses that should continue to do well next year.
2021 promises to be an interesting year.
Some may view it as a year of recovery from a devastating crisis that has all but decimated major economies.
But I’d like to see it as a year of opportunities.
For businesses that are riding on strong tailwinds and understand the importance of adaptation, 2021 will allow them to grow further and do better.
Here are three blue-chip companies that are set up for growth next year.
Venture Corporation Ltd (SGX: V03)
Venture Corporation Ltd is a provider of technology products, services and solutions for multinational clients.
The group manages a portfolio of more than 5,000 products and employs more than 12,000 people worldwide.
Venture serves a wide variety of sectors including life sciences, medical devices and network and communications.
In its third-quarter business update, the group reported a sequential quarter on quarter improvement in both revenue and net profit, aided by broad-based growth across the group’s divisions.
Third-quarter 2020 revenue was 18.2% higher than the second quarter, though it was still 5.8% lower year on year.
Higher demand for essential products such as ventilators drove net profit higher by 14.2% compared to the previous quarter, and Venture narrowed the year on year fall in net profit to just 6%.
The group had been negatively impacted by COVID-19 disruptions during the first quarter, but has bounced back strongly since then.
The boom in data usage should continue to power technological advancements, while the demand for electronic devices for telecommuting should translate to higher demand for electronic products.
These tailwinds should continue in 2021 and will lead to better prospects for the group.
Venture had increased its interim dividend to S$0.25 this year, up 25% year on year, in a show of confidence in its future.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a REIT that invests in data centres around the world.
As of 30 September 2020, the REIT’s portfolio consists of 18 data centres worth S$2.9 billion that are spread out over eight countries.
The REIT was already doing well before the crisis hit our shores.
Through a series of acquisitions, Keppel DC REIT has almost tripled the value of the portfolio over the last six years and more than doubled the number of data centres from eight to 18.
The pandemic, however, has accelerated data usage and online adoption, leading to significantly higher demand for data centres.
This tailwind should benefit the REIT as enterprises are now spending more on cloud infrastructure, and this is expected to grow by 22% per year over the next five years.
Keppel DC REIT has also delivered strong financial and operating numbers.
For the first nine months of 2020, gross revenue rose 35% year on year while distribution per unit increased by 16.5% year on year to S$0.06732.
Aggregate leverage remains fairly low at 35.2%, while the REIT enjoys a low borrowing cost of 1.6% per annum and has high interest coverage at 12.7 times.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is the sole exchange in Singapore.
The bourse operator operates a platform for the buying and selling of securities such as equities and derivatives. It also offers listing, settlement and clearing services for listed companies.
For its full fiscal year 2020 earnings, SGX reported revenue of S$1 billion, the highest since its IPO back in 2000.
Net profit jumped 21% year on year to hit S$472 million, and the group declared a slightly higher quarterly dividend of S$0.08, up from S$0.075 a year ago.
The growth was achieved through organic growth in derivative volumes and also the acquisitions of Scientific Beta and BidFX by the group.
CEO Loh Boon Chye has been steering SGX over the years to evolve into a multi-asset exchange, rather than just an equities trading platform.
These efforts are bearing fruit as can be seen by SGX’s strong results despite the ongoing pandemic.
The group is not resting on its laurels, though.
It has continued to seek out collaborations and partnerships to expand its suite of products for clients.
Some examples include the launch of crypto indices in collaboration with cryptocurrency market data provider CryptoCompare, as well as partnering with New Zealand Exchange to explore the listing of its suite of dairy derivatives contracts on SGX’s platforms.
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Disclaimer: Royston Yang owns shares in Singapore Exchange Limited and Keppel DC REIT.