3 Companies poised to benefit from Budget 2022

Singapore’s Finance Minister, Lawrence Wong unveiled the Budget 2022 in Parliament on Friday, 18 February 2022.

According to the budget, Singapore has maintained its growth forecast for this year at between 3% - 5%, with the economy staging a recovery in 2021. The economy expanded 7.6% last year, mainly lifted by the manufacturing, finance and insurance and wholesale trade sectors.

A quick recap for Singapore Budget 2022 indicates a list of measures such as:

• Strengthen Singapore’s Digital Capabilities
• Adoption of more Electric Vehicle Chargers
• Progressively raising carbon tax to reach net-zero target 'by or around mid-century
• Higher taxes for top tier earners, high-end properties and luxury cars
• 2-step GST hike to take place in 2023 and 2024

In this article, we will be touching on 2 such measures and how 3 companies can stand to benefit from them.

Measure #1 – Strengthen Digital Capabilities

In this budget, Singapore will be upgrading its broadband infrastructure, with the view of increasing broadband access speeds by about 10 times over the next few years. Meanwhile, the government will also invest in future technologies such as 6G, to tap the next communications and connectivity wave.

Aside from infrastructure improvements, an additional S$200 million will be set aside over the next few years to boost schemes that build digital capabilities in businesses and workers.

Here are 2 companies that could stand to benefit from this initiative:

Singtel Limited (SGX: Z74)

Singtel Limited (“Singtel”) is Asia's leading communications technology group, providing a portfolio of services from next-generation communication, technology services to infotainment to both consumers and businesses.

For the past 6 months and 1 year, Singtel’s total shareholder return came in at 9.49% and 10.97% respectively.

With Singtel being the largest telecom service provider in Singapore, the upcoming investment in 6G as well as various scheme to build digital capabilities among businesses and workers could see a higher adoption in the latest telecom technology.

Netlink NBN Trust (SGX: CJLU)

The NetLink Group’s nationwide network is the foundation of Singapore’s Next Generation Nationwide Broadband Network (“Next Gen NBN”), over which ultra-high-speed internet access is delivered throughout mainland Singapore and its connected islands.

Despite having a negative total shareholder return of 3.47% for the past 3 months, its 1 year total shareholder return continued to be in a positive territory of 8.00%.

With Singapore’s intention to upgrade its broadband infrastructure and increase access speed by about 10 times over the next few years, Netlink NBN Trust could be in a sweet spot to ride on this new investment initiatives as it is currently managing Singapore’s Nationwide Broadband Network.

Measure #2 – Adoption of more Electric Vehicle Chargers

In this budget, Singapore intends to accelerate the adoption of electric vehicles (“EV”) by building more charging points closer to where people live.

The government has provided significant incentives for EV adoption. Within a year, the EV share of new car registrations has jumped from 0.2% in 2020 to around 4% last year.

Here is 1 company that could stand to benefit from this initiative:

ComfortDelGro Corporation Limited (SGX: C52)

ComfortDelGro Corporation Limited (“ComfortDelGro”) is one of the world’s largest land transport companies with a total fleet size of 40,000 buses, taxis and rental vehicles.

Despite the presence of a dividend payout to shareholders, the 6 months and 1 year total shareholder return went into a negative territory of 7.30% and 4.09% respectively.

Given that ComfortDelGro’s consortium was one of the two winners in a pilot tender for 620 EV charging points in public car parks, this latest announcement will no doubt provide more opportunities for ComfortDelGro to expand their charging network in Singapore in the long term.

Conclusion

Despite a positive economic outlook for 2022, the latest budget is necessary to help Singapore to improve its digital capabilities, beef up the capital reserves and allow the country to pursue environmentally friendly initiatives.

That said, amid the high interest rate and inflationary environment, investors should do due diligence and invest with caution.

More than 3,600 investors are on our Telegram, what are you waiting for? Join us now for more first-hand updates, articles, events, promos and happenings. Click here now. See you on the inside.