This earnings season has seen a mix of good and weak results.
Some companies are struggling with poorer demand arising from the twin headwinds of high inflation and surging interest rates.
However, others are cruising along on either a strong recovery from the pandemic or are beneficiaries of these higher rates.
In particular, we turn our attention to the crop of blue-chip companies that have reported their earnings thus far.
Blue-chip companies are well-known for their resilience during tough times.
Better still if they had also reported an impressive set of earnings as this means that the business is rock-steady and cruising along fine.
Share prices usually follow the health of the business closely. Hence. we highlight three local blue-chip stocks that reported better profits that may see their share prices head higher over time.
OCBC Ltd (SGX: O39)
OCBC is Singapore’s second-largest bank and offers a comprehensive range of banking services for individuals and corporations.
For its fiscal 2023’s first quarter (1Q 2023), the lender reported an impressive set of results as net profit climbed 39% year on year to a record high of S$1.88 billion.
The better numbers were due to a much higher net interest margin (NIM), which shot up from 1.55% a year ago to 2.3% in 1Q 2023.
There is evidence that the NIM may stay high for some time as the US Federal Reserve raised interest rates by another 0.25 percentage points for its 10th consecutive increase since March 2022.
CEO Helen Wong also expects the NIM to hover in the region of 2.2% for 2023.
She also sees a positive effect of China’s reopening in boosting cross-border flows and expects low to mid-single-digit year on year growth in the bank’s loan book.
In addition, money inflows have also been sustained due to Singapore’s safe-haven status, allowing wealth management assets under management to rise to S$270 billion.
However, OCBC is carefully monitoring the geopolitical situation and is mindful of market volatility that may arise.
The risk of a possible recession could also dampen not just the bank’s loan growth outlook, but may also increase its provisions for bad loans.
Keppel Corporation Limited (SGX: BN4)
Keppel Corporation has kept the momentum going as the group transforms into an asset-light powerhouse.
The skilful execution of its Vision 2030 plan hopes to deliver more value as the years go by and transition the organisation to a more recurring revenue model.
For 1Q 2023, revenue was 9% higher year on year at S$2.26 billion with net profit strongly boosted by the disposal gain arising from the merger of its Offshore and Marine division with Seatrium Limited (SGX: S51).
Even after the exclusion of these one-off items, net profit was slightly higher year on year.
There could be better results to come from the group as it just announced a major reorganisation.
Keppel Corporation will create three platforms and remove its conglomerate structure to form one integrated reporting entity.
It also has an AUM target of S$200 billion which it intends to achieve through a virtuous investment cycle of raising capital, building out a pipeline of quality investments, and driving attractive returns.
Genting Singapore (SGX: G13)
Genting Singapore is the owner and operator of the Resorts World Sentosa (RWS) integrated resort (IR).
For 1Q 2023, the group reported a 54% year on year jump in revenue to S$484.5 million, led by an 89% year on year surge in non-gaming revenue and a 45% year on year rise in gaming revenue.
Genting’s net profit for the quarter more than tripled year on year from S$40.4 million to S$129.2 million because of the ongoing recovery of regional travel and tourism demand.
The group could have done even better, but its results were held back by airline capacity constraints while elevated airfares also dampened some demand for air travel.
Genting Singapore is upgrading and up-scaling its attractions as part of its “RWS 2.0” strategy.
Festive Hotel has been rebranded as Hotel Ora with 389 rooms that started receiving guests last month.
Other hotels such as Hotel Michael and Crockfords Tower will also be renovated in phases.
The Forum at RWS will undergo an extensive upgrade this month and have its gross floor area more than doubled to almost 20,000 square metres over three levels.
Slated to complete by the end of 2024, this cluster will feature upscale restaurants, speciality shops and concept stores.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.