As the economy sputters back to life, it’s showing up on the company’s profits.
Businesses that have a strong brand, a consistent track record of growth and are latching onto growth tailwinds qualify as a great investment.
These types of companies can carry you through economic cycles to deliver pleasing returns over the long term.
As we embrace brighter days ahead, investors are also on the lookout for companies that are surging ahead of their competition.
Many companies have managed to eke out higher year on year profits as they report their latest earnings.
But a handful has done even better and gone on to report a doubling of net profit.
Should they qualify as a buy on your list?
The Hour Glass (SGX: AGS)
The Hour Glass, or THG, is a specialist watch retailer that owns 50 boutiques in twelve cities around Asia.
The group sells renowned Swiss watch brands such as Rolex, Patek Phillipe, Hublot, and Omega, among others.
For its fiscal 2022 first half (1H2022), the group reported a 63% year on year surge in revenue to S$472.4 million.
The increase was due to positive consumer sentiment within the luxury watch industry.
Net profit more than doubled year on year from S$29.7 million to S$62.65 million.
THG declared an interim dividend of S$0.02, in line with what it paid out in the previous year.
The business generated a free cash flow of S$78.6 million, 53.8% higher than the S$51.1 million generated the year before.
The group held S$246.8 million in cash and S$120.2 million in borrowings as of 30 September 2021.
THG purchased 181 Collins Street in Melbourne and paid S$36.5 million for it in 1H2022 as it steadily built up its retail presence in Australia.
The watch retailer has also incorporated three wholly-owned subsidiaries in Macau, Taiwan and Shanghai, China from July to September as part of its business expansion plans.
PropNex Ltd (SGX: OYY)
PropNex is an integrated real estate services provider with close to 10,000 sales professionals under its employment.
Services offered include real estate brokerage, training and consultancy.
The group has a presence in Cambodia, Indonesia, Malaysia and Vietnam in addition to Singapore.
For the first nine months of 2021 (9M2021), PropNex reported a year on year doubling of revenue to S$715.5 million.
The improvement in the economy had led to an increase in the number of property transactions, leading to higher commission income from agency services.
The third quarter of 2021 (3Q2021) also saw the highest number of private resale transactions in a decade.
Net profit soared by 114.8% year on year to S$49.9 million.
PropNex also announced that it was the first real estate brokerage to have a 10,000-strong salesforce, making it Singapore’s largest real estate agency.
Free cash flow generation remained strong at S$56.8 million for 9M2021.
PropNex expects that the strong demand for HDB resale flats should keep the property market buoyant for the rest of this year and into next year, too.
However, with interest rates poised to rise next year, the group could face a fall in demand for real estate, thus dampening its outlook for 2022.
Grand Venture Technology Ltd (SGX: JLB)
Grand Venture is a manufacturing solutions and services provider to the semiconductor, life sciences and electronics industries.
The group serves large original equipment manufacturers by providing engineering, assembly and test services.
For 9M2021, revenue soared by 96% year on year to S$85.4 million while net profit more than tripled year on year to S$13.7 million.
The group garnered more business from its key customers during this period and also saw its gross margin improve from 30.6% to 32.5% from 9M2020 to 9M2021.
The better gross margin was due to improved capacity utilisation.
Nearly three-quarters of its revenue came from the semiconductor industry, which also saw revenue doubling year on year to S$62.5 million.
Surging demand for digitalisation, cloud computing, and electric vehicles led to the strong performance of this division.
Grand Venture is researching advanced manufacturing techniques and advanced materials such as quartz and ceramics to increase its breadth of services to customers.
It is also embarking on Industry 4.0 initiatives at its Singapore facilities to increase the level of automation and further improve productivity.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.