3 Singapore Stocks to Buy With Your Ang Baos in the Year of the Tiger

Singapore stocks buy Year of Tiger

Tim Phillips

January 31, 2022

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Stock markets in the US so far in 2022 have had a month full of red days. While red is a lucky colour in Chinese tradition, it’s clearly not been such a lucky month for most investors in the world’s largest stock market.

However, closer to home in Singapore, stocks have done better. The Straits Times Index is actually up around 4% so far in 2022.

That’s been driven by a rotation into so-called “value” stocks, with the index home to many of these types of companies.

This follows a solid 2021 for the Straits Times Index, which rebounded from a horrid 2020 to post a positive total return of 13.6% last year.

Now that we’re about to welcome in the Year of the Tiger during the Lunar New Year, it’s worth taking stock of the market and looking for where the best buys could be.

With many of us set to receive lucky red “ang bao” packets during the new year holidays, here are three Singapore stocks that you can spend your money on in the Year of the Tiger.

1. AEM Holdings

When we think of semiconductor stocks, most of us gravitate towards the big chip players in the US markets.

Yet Singapore has its own semiconductor growth firms, such as AEM Holdings Ltd (SGX: AWX). The company serves as global provider of semiconductor test solutions.

Effectively, what it does is that it covers the multiple stages of the testing process for large chip firms – given quality control (QC) is a crucial part of the production process.

One of its key clients is none other than Intel Corporation (NASDAQ: INTC), one of the largest vertically-integrated chip firms in the world.

AEM also has a solid track record, having grown its revenue from S$70.1 million in full-year 2016 to S$519 million for the whole of 2020 – a compound annual growth rate (CAGR) of a whopping 65%.

Meanwhile, profit before tax (PBT) rose at a CAGR of 108% from 2016-2020 to S$113.8 million.

While revenue and PBT dropped in the first nine months of 2021 (on supply constraints), AEM looks like a strong stock to hold in 2022 on the back of news that Intel is investing US$7 billion on a new chip plant in Malaysia.

This will help Intel diversify its manufacturing capabilities while also giving AEM another substantial channel for revenue growth over the next few years.

2. DBS Group

The second stock is one everyone should have heard of given it’s the biggest home-grown Singapore bank; DBS Group Holdings Ltd (SGX: D05).

DBS had a solid 2021, with its shares returning trouncing the Straits Times Index’s return as its stock price rose 30% for the whole year.

That run has continued in 2022 with DBS shares currently up over 7% so far this year. How has it done so well?

Mainly because rising interest rates, amid higher inflation, are likely to help DBS’s net interest income (NII) and net interest margin (NIM) in 2022 and beyond.

DBS, being the biggest Singapore bank, also has the greatest upside/sensitivity to rising interest rates given its size and loan book.

With an astute acquisition strategy, including its latest buy of Citigroup Inc’s (NYSE: C) retail banking assets in Taiwan, growth and dividend certainty for this banking giant should serve investors well this year.

3. SATS

Last, but certainly not least, is SATS Ltd (SGX: S58) – the largest food solutions and gateway services provider at Singapore Changi airport.

The company also provides its various services, such as in-flight catering, to 55 locations across 14 countries (mainly in Asia).

While SATS was clearly hit hard by the Covid-19 pandemic, it’s also a great stock to hold if you believe we are at the end of continuous lockdowns and on/off restrictions associated with the pandemic.

Its latest Q2 fiscal year (FY) 2022 earnings (for the three months ending 30 September 2021), revenue was up 27% year-on-year to S$293.9 million. That’s been on an uptrend for the past few quarters.

Flights handled has also picked up slightly for SATS, as has cargo tonnage – which jumped 64.4% in the first half of FY 2022.

Meanwhile, during the pandemic, SATS pivoted to providing food solutions for non-aviation industries, serving end consumers in modern and traditional retail, online platforms and institutions.

As a Singapore-focused company, SATS derives 86% of its revenue from the “Little Red Dot”.

So, if investors have confidence in Singapore bouncing back and continuing to open up to international travellers, then SATS is a great stock to hold.

Pouncing on winning stocks

As we enter the Year of the Tiger, it’s important that investors focus on companies that are going to deliver prosperity and success for us over the long term.

In that sense, AEM, DBS and SATS provide three great Singapore options for investors to spend their Ang Baos on as we welcome in the Lunar New Year.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares in DBS Group Holdings Ltd.

About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer. In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.