Singapore investors have been pleasantly surprised with the local stock market so far in 2022.
Here, the benchmark Straits Times Index (STI) has held up better than other global stock markets – such as the S&P 500 Index in the US.
The presence of a lot of “old economy”, or “value”, companies in Singapore has benefitted the local market and investors.
In November, the STI posted positive returns of 6.4%, as it followed global stock markets upwards on hopes that the US Federal Reserve (Fed) is slowing upcoming interest rate hikes.
So, as we enter the final month of a tumultuous 2022, where are the opportunities in the local stock market?
Here are five top Singapore stocks that long-term investors can consider buying and holding in December 2022.
1. AEM Holdings
I wrote recently about the strength of semiconductor testing and services firm AEM Holdings Limited (SGX: AWX).
The company benefitted greatly during the Covid pandemic boom for chip firms. While AEM’s share price has cooled off a bit in 2022 (down around 25% so far this year), that rapid growth is still visible in its latest earnings.
AEM recorded revenue of S$206 million in Q3 2022, up 41% year-on-year while its net profit came in at S$32.2 million – an increase of 38.3% from the same period last year.
In terms of its 9M 2022 period, AEM’s revenue more than doubled to reach a record high of S$746.6 million.
With Intel Corporation (NASDAQ: INTC) as a key customer, AEM should also benefit from the recent enactment of the US CHIPS Act.
For dividend investors, the company also pays a decent dividend – yielding around 3% based on its current share price.
2. UOB
Of all the big banks in Singapore, United Overseas Bank Ltd (SGX: U11) – also known as UOB – is actually the smallest in terms of market cap.
Yet the bank continues to perform just as well in 2022, if not better, than its other two big peers.
Indeed, UOB’s latest earnings show how strong the Southeast Asia-focused bank continues to be.
Net interest margin (NIM) saw a solid 28-basis point (bp) boost quarter-on-quarter in its latest Q3 2022 period.
That was in line net interest income (NII) that was up a solid 20% quarter-on-quarter to S$2.2 billion (see below).
Source: UOB Q3 2022 and 9M 2022 earnings presentation
Additionally, the bank announced at the beginning of November that it has completed the acquisition of Citigroup’s (NYSE: C) Malaysian and Thai consumer banking businesses.
If investors recall, UOB announced in January of this year that it would acquire Citi’s consumer banking businesses in Indonesia, Malaysia, Thailand, and Vietnam.
This should solidify UOB’s strength in its core Southeast Asian markets and provides a solid growth driver for the bank heading into 2023.
3. Sembcorp Industries
Third up we have clean energy and renewables player Sembcorp Industries Limited (SGX: U96). While Sembcorp Industries has had an extraordinary 2022 so far, the company is just getting started.
That’s because its “brown to green” portfolio transformation has just started to take shape.
The company has ambitious plans to move most of its electricity-generating assets towards renewables by 2025.
While it initially had a plan to reach 10 gigawatts (GW) of renewable energy capacity by 2025, three recent acquisitions by Sembcorp Industries has seen it already accumulate 9.4GW.
An ambitious clean energy transition plan, broadly higher gas prices, and the possibility of a special dividend at the end of FY2022, all mean that Sembcorp Industries is one stock investors can hold for the long haul.
4. CapitaLand Investment
While I’m not a huge fan of certain REITs that CapitaLand Investment Ltd (SGX: 9CI) owns, the listed real estate management company itself is much more appealing.
That comes after its transformation from just a pure-play property development company into a firm that owns and manages a variety of real estate assets.
CapitaLand Investment’s Q3 business update saw the company report impressive year-to-date (for the nine months ending 30 September 2022) fund-related earnings of S$339 million, up 16% year-on-year.
Its lodging management business also continues to see improved metrics, with Q3 2022 revenue per average user (RevPAU) hitting S$110, up from S$77 in the same period last year.
So far in 2022, CapitaLand Investment has managed to recycle around S$2.4 billon in assets while also buying back around S$133 million worth of shares.
Seen more as a capital allocation and recycling firm, CapitaLand Investment is a much better option – versus City Developments Limited (SGX: C09) – for investors looking for property exposure.
5. NetLink Trust
Finally, we have reliable yield-centric firm NetLink NBN Trust (SGX: CJLU), which should appeal to conservative dividend investors as well as anyone who wants passive income.
That’s because NetLink Trust is the sole provider in Singapore of ultra-high-speed broadband access via three channels; residential, non-residential, and non-building address point (NBAP).
Telcos effectively pay NetLink for the ability to use its fibre optic cables to deliver Internet access to individuals and businesses around the city state.
In its latest H1 FY2023 earnings, NetLink saw its distribution per unit (DPU) rise 2.3% year-on-year to 2.62 Singapore cents.
That gives the company a 12-month forward dividend yield of around 6.2% currently, based on its share price of S$0.84.
Investors should watch out for the interconnection (ICO) pricing review – set to be completed in the first half of 2023 – which sees the regulator set pricing. A lower-than-expected ICO pricing could be a potential near-term headwind.
Building portfolio resilience across Singapore sectors
At the end of the day, long-term investors should be thinking about how to best build resilience in their portfolio while trying to maximise long-term returns.
We should also try to be diversified across sectors so that we can benefit from any tailwinds each may receive, while also sheltering us from being overexposed to any one area.
With AEM Holdings, UOB, Sembcorp Industries, CapitaLand Investment, and NetLink Trust, Singapore investors have a wide array of solid stocks to buy and hold in December.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares in Sembcorp Industries.
