The Best Singapore Blue-Chip Stocks for 2022

An earlier version of the article appeared on The Smart Investor website.

Oftentimes, investors tend to look at the past when searching for investment opportunities.

Solid track records can provide assurance that a business has done well over time.

However, it’s also important to cast an eye to the future to see if the company can continue to grow its business.

The same practice applies to blue-chip companies as well.

While many proved resilient in the last two years despite the challenges faced, investors need to tease out those that can continue to do well moving forward.

Those that can benefit from new trends or latch on to the nascent global recovery are poised to do well.

Let’s review some of the best blue-chip candidates for 2022.

Keppel DC REIT (SGX: AJBU)

The pandemic caused numerous businesses and people to head online, resulting in a surge in online activity.

Keppel DC REIT, which owns a portfolio of 19 data centres across eight countries, is in a great position to benefit.

The data centre REIT should see robust data centre demand as end-user spending on cloud services is expected to grow by 23.1% this year to US$332.3 billion.

Moreover, the increase in cloud and social media companies should continue to drive demand for data storage.

The REIT had just inked an investment in telecommunication company M1’s network assets in the form of bonds and preference shares, with an expected 3.8% increase in the fiscal year 2020 (FY2020) distribution per unit to S$0.09519.

The acquisition of data centres in the Netherlands and China should also help to further boost the REIT’s DPU next year.

DBS Group (SGX: D05)

Singapore’s largest bank, DBS Group, has demonstrated its resilience in the last 24 months.

The lender reported a record net profit of S$5.4 billion for the first nine months of the year as fee income jumped by 17% year on year to a record S$3.1 billion.

CEO Piyush Gupta believes that interest rates are poised to rise as inflation rears its ugly head.

The increase in rates will benefit the bank’s net interest margin and push up net interest income in 2022.

Income-seeking investors also have reason to rejoice as the bank restored its dividends following the relaxation of restrictions by Singapore’s central bank.

There’s good reason to believe that the good times will carry on for DBS.

The economic recovery should spur loans growth while the rise in high net worth individuals should also bode well for the bank’s asset management arm.

The setting up of a digital exchange and the bank’s acquisition of Lakshmi Vilas Bank in India last year should also broaden its revenue streams.

Singapore Exchange Limited (SGX: S68)

Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.

The bourse operator has been active in broadening its suite of products and services to cater to its growing clientele.

This year alone, it has partnered with New Zealand Exchange and United Overseas Bank Ltd (SGX: U11) for the launch of dairy derivatives and a yield-focused green REIT ETF.

SGX also inked a collaboration with the Shanghai Stock Exchange to distribute its securities data within Mainland China.

It is also working with parties such as DBS Group and Temasek Holdings to set up Climate Impact X, a global carbon exchange and marketplace to provide organisations with high-quality carbon credits.

Aside from these initiatives, SGX is also active in mergers and acquisitions. In July, it announced the purchase of MaxxTrader for US$125 million to strengthen its presence in the foreign exchange, over-the-counter space.

These moves are all part of what SGX communicated during their Analyst Day recently as it seeks to position itself as a multi-asset exchange.

Mapletree Commercial Trust (SGX: N2IU)

Mapletree Commercial Trust, or MCT, is a retail and commercial REIT that owns a portfolio of five properties including VivoCity mall and Mapletree Business City.

As of 30 September 2021, its properties were worth S$8.8 billion and offer around five million square feet of net lettable area.

Like most shopping malls, VivoCity is suffering from lower footfall.

Despite the predicament, the REIT still reported an 11.5% year on year increase in gross revenue to S$243.7 million for its fiscal 2022 first half (1H2022).

Net property income rose by 10.7% year on year while DPU inched up by 5.3% year on year to S$0.0439.

MCT is poised to benefit from Singapore’s gradual reopening as more vaccinated travel lanes are launched.

As more tourists flow into Singapore, VivoCity, which is situated close to Sentosa, should also enjoy higher footfall and tenant sales.

The REIT manager has also introduced new offerings in the mall such as lululemon (NASDAQ: LULU) and Mr Coconut.

VivoCity has also collaborated with GrabFood, a food delivery service under Grab (NASDAQ: GRAB), and unveiled a shopping rewards programme called VivoRewards+.

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This article was written by Royston Yang at The Smart Investor.

Disclaimer: Royston Yang owns shares of Keppel DC REIT, DBS Group and Singapore Exchange Limited.

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