5 Top Singapore Stocks to Buy in May 2023
May 5, 2023
In the face of turbulent market conditions so far in 2023, the Singapore stock market has displayed unwavering resilience.
The benchmark Straits Times Index (STI) has managed to achieve a commendable positive total return of +2.1% in the first four months of the year, with April alone contributing +1.3%.
Amid the prevailing uncertainties and mounting concerns about a potential global recession, I believe these five top-performing Singapore stocks present promising opportunities for investors in May.
United Overseas Bank Ltd (SGX: U11), commonly known as UOB, recently unveiled its impressive financial results for Q1 FY2023, leading the pack among Singapore banks.
This robust performance was characterised by a record 74% year-on-year (YoY) increase in core net profit, reaching S$1.6 billion.
Additionally, net profit soared by 67% YoY and 31% quarter-on-quarter (QoQ) to S$1.51 billion, even after accounting for one-time expenses associated with the acquisition of Citibank’s retail assets in Malaysia and Thailand back in November 2022.
The driving force behind these unprecedented earnings is the significant surge in both net interest income (NII) and non-interest income, which grew by 43% YoY and 66% YoY, respectively.
Despite concerns over slower loan growth, the rebound in wealth management fees and reinforced trading and investment fees assuaged investor apprehension.
UOB’s non-performing loan (NPL) ratio remained stable at 1.6%, while its cost-income ratio (CIR) showed improvement, settling at 40.9% for Q1 FY2023.
The bank has a strong balance sheet with a solid common equity tier-1 (CET1) ratio of 14%, which is much higher than the Basel III requirement of a CET1 ratio of at least 4.5%, to protect against sudden losses in asset value.
Meanwhile, UOB’s growth outlook remains solid, supported by Asia’s ongoing economic recovery.
2. Sheng Siong
Singapore’s supermarket operator, Sheng Siong Group Ltd (SGX: OV8), reported a decline in net profit for Q1 FY2023, reflecting a 5.2% YoY decrease to S$33.4 million as consumer behaviour normalises in the post-COVID era.
Quarterly revenue also dipped by 0.4% YoY, totalling S$365.5 million, while gross profit achieved a marginal gain of 0.1% YoY, reaching S$102.8 million.
Other income, however, fell by 26.7% YoY to S$2.4 million during Q1 FY2023, as a result of reduced government grants and lower scrap material sales.
Despite this weaker financial performance, Sheng Siong remains a defensive pick amid looming recession risks.
The company is poised to benefit from new store openings and government-introduced inflation offset measures that support consumer spending.
For FY2023, Sheng Siong plans to open four new stores, in line with the Singapore government’s efforts to ease tight housing supply.
One local store has already been launched, and an additional 11 sites slated for bidding through Q1 2024.
The persistent inflationary environment and potential economic slowdown are likely to drive increased sales of house brands and improve margins, as consumer preferences shift towards value offerings like those provided by Sheng Siong.
3. CapitaLand Ascendas REIT
CapitaLand Ascendas REIT (SGX: A17U), a leading industrial REIT, boasts a diverse portfolio of 229 properties valued at S$16.7 billion as of 31 March 2023.
During Q1 FY2023, CapitaLand Ascendas REIT maintained a high portfolio occupancy rate of 94.4% and registered positive rental reversions of 11.1%.
CapitaLand Ascendas REIT has an impressive S$617.4 million worth of ongoing projects across Singapore, Australia, and the US, which are expected to bolster Distribution Per Unit (DPU) in the medium term.
In FY2022, CapitaLand Ascendas REIT reported strong financial performance, which saw an increase of 3.5% YoY in its DPU, driven by 10.3% YoY growth in its gross revenue and 5.2% improvement in its net property income (NPI).
At its current level, CapitaLand Ascendas REIT is trading a distribution yield of around 5.5%.
It also has a healthy balance sheet with a gearing level at 38.2% while nearly 75% of its debt is secured through natural hedges.
CapitaLand Ascendas REIT also embarked on strategic divestments that align with its proactive asset management approach that aims to recycle capital into high-yielding assets with promising future potential.
4. Keppel Corp
Keppel Corporation Limited (SGX: BN4) is another top pick that I believe will benefit from their recent restructuring development.
The company is in the midst of transforming and restructuring its organisation into a global alternative asset manager with deep operating capabilities.
It will transition into a horizontal business model featuring three platforms: fund management, investment and operations, that span across three key business segments, which include infrastructure, real estate and connectivity.
As part of its major reorganization, Keppel Corp will embark on its asset monetisation strategies that will reach S$17.5 billion within seven years as well as a target to reaching S$200 billion in its assets under management (AUM).
This major reorganisation provides opportunities for investors to buy into an emerging global asset manager with exposure in renewables, decarbonisation solutions, sustainable urban development and connectivity.
5. CapitaLand Ascott Trust
Investors seeking to capitalize on the resurgence of travel should consider CapitaLand Ascott Trust (SGX: HMN), or CLAS, as a promising investment opportunity.
CLAS is the largest Asia-Pacific lodging trust, valued at S$8.0 billion as of December 31, 2022, primarily investing in global income-producing real estate and assets for serviced residences, rental housing, student accommodation, and other hospitality purposes.
In Q1 FY2023, CLAS reported robust financial results, with a remarkable 59% growth in gross profit.
The uptick in travel and pent-up demand, particularly from returning Chinese tourists, is expected to support its earnings momentum.
Moreover, CLAS’s solid financial position and stable income base provide investors with downside protection, further enhancing its appeal as a strategic investment choice in the recovering travel sector.
Diversify your portfolio across these winners
As global market uncertainties loom, investors should consider diversifying their portfolios across various sectors.
As a result, my top Singapore stocks to watch in May 2023 include UOB, Sheng Siong, CapitaLand Ascendas REIT, Keppel Corp, and CapitaLand Ascott Trust.
Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.
Billy is passionate about the capital market and believes in investing for the long haul. Prior to this, he was an economist at RHB Investment Bank, covering Thailand and Philippines market. He also worked as a financial journalist at The Edge Malaysia and has experience working with an asset management firm. Aside from the capital market, Billy loves a good conversation over a cup of coffee, is a fitness enthusiast and a tech geek.