2 Singapore counters that could benefit from Biden’s Presidency

With the conclusion of the US election, Joe Biden has secured enough electoral college votes to become the next President of the United States of America. Being the leader for one of the world’s richest and most powerful country, the upcoming direction of his policies/measures will have a far-reaching effect on the world’s economy.

In this article, we will be looking at 2 Singapore counters that could potentially benefit from a Biden’s Presidency.

Hi-P International Limited (H17.SGX)

With the expected improvement in the US-China relationship under Biden’s presidency, there could be a reduction in trade tension between the 2 superpowers. This could indirectly have a positive impact on Hi-P International Limited (“Hi-P”), which is one of the regions' largest integrated contract manufacturers and close to 50% of its revenue is from the US. Moreover, several of Hi-P's manufacturing facilities are in China as well. A potential decrease in tariffs for Chinese exports by the US could also benefit Hi-P greatly.

Revenue & Net Profit

Hi-P's trailing 12-month revenue has declined marginally by 3.88% year-on-year to S$1.34 billion as a result of the temporary closure shutdown of its factory operation in China due to the COVID-19 situation.

Despite a marginal fall in revenue, Hi-P's Profit Attributable to Shareholders fell by more than 23% year-on-year to S$79.4 million as a higher depreciation of property, plant and equipment eroded their bottom line.

CNMC Goldmine Holdings Limited (5TP.SGX)

In Joe Biden's campaign, the promise of a big-spending plan on green energy and a 2nd stimulus package to tackle the economic fallout of COVID-19 will push the US government's fiscal position into uncharted territory.

In order to finance all these big spending plans, the Federal Reserve will have no choice but to print more currency to meet the demand. The repercussions will be the devaluation of the US Dollar as more US currency will flood the market. This will push Gold prices higher as it is being regarded as a safe haven and a hedge against the devaluation of the US Dollar.

Therefore, with a higher gold price, CNMC Goldmine can stand to benefit from this trend as the company can expect a higher selling price for its gold given production volume has improved.

Revenue & Net Profit

CNMC's trailing 12-month revenue dropped by 36% year-on-year to S$40.2 million despite an increase in average realised gold price. This was due to COVID-19 pandemic which resulted in a stop in all mining activities for a period of time. This has caused a significant drop in the production of fine gold, which impacted their revenue greatly.

As a result of lower gold production volume and higher operating cost, CNMC’s Profit Attributable to Shareholders has plunged by more than 60% year-on-year to only S$1.8 million.

Conclusion

The above 2 Singapore counters are just some of the counters that could potentially benefit from Joe Biden’s presidency. Right now, positive sentiments are pushing the stock market to higher grounds, given the recent strong gains seen over the past few trading days.

In the long run, we must continue to observe how Biden will shape US economic, foreign and social policy in order to have a clear picture on the direction that the US is heading towards.