5 Top Singapore Stocks to Buy in February

February 13, 2023

2023 has started positively for investors as the stock market rebounded during the first month of this year in anticipation of a slowdown in the US Federal Reserve (Fed) rate hikes.

However with a relatively subpar earnings in the US, there are rising concerns about the health of the economy with more analysts lowering their earnings expectations.

With so much uncertainty in the global market, investors can turn to the Singapore market to build a resilient and defensive portfolio.

Here are 5 top Singapore stocks that I think investors can buy this month to weather the global economic uncertainty.

1. DBS Group

Singapore’s largest bank, DBS Group Holdings Ltd (SGX: D05) has done well in 2022 and is likely to continue to benefit from the higher interest rates in 2023.

While the slower rate hikes in US could dampen some of the upside of the bank, DBS Group will still see a higher interest income with the repricing of its commercial property mortgage interest rates.

DBS Group also has a large portion of its funding from cash accounts which do not generate any interest expense on them.

Aside from the near-term benefit from the rising interest rate environment, DBS Group also has a strong track record during economic crises.

With a forward dividend yield of 4.0%, it offers an attractive investment opportunity for investors.

The higher interest income in the near-term could also see a higher dividend payout in the near-term.

While downside risks remain with its relatively high valuation and potential earnings risks from a possible global recession, DBS Group is a good company that could help investors to ride out the bumps in the market.

2. Sembcorp Industries

Another stock that attracted my interest is energy and urban solutions provider, Sembcorp Industries Limited (SGX: U96).

This is especially for investors who are looking into green and sustainable investment.

Sembcorp Industries or SCI for short, has a balanced energy portfolio of 16.7 gigawatts (GW) as well as a project portfolio spanning more than 13,000 hectares.

SCI is also transitioning into green energy and buying up renewable energy assets.

In terms of progress, SCI has surpassed its target and is not far from its 2025 target of owning 10 gigawatts (GW) of renewable energy assets.

In its latest earnings results, SCI posted a strong performance for the first half of 2022 (1H2022), which saw its revenue jumped by 45% year-on-year (yoy) while net profit excluding exceptional items nearly doubled during the same period.

3. Sheng Siong

As mentioned at the beginning of this year, Sheng Siong Group Ltd (SGX: OV8) is among the first names that comes to investors’ mind whenlooking for a recession-proof stocks to invest in.

As Sheng Siong is one of Singapore’s largest supermarket chains that offers good value to customers, it will benefit from the shift of spending behaviour on essential goods such as bread, eggs, fruits, vegetables, and others.

There is a rising concern on the economy with higher cost of living, rising interest rates and the reduction of pandemic support measure.

Aside from that, the reopening in China will also benefit its China subsidiary.

Sheng Siong’s management has also guided that the expansion over the next three to five years remains intact with about three to five new stores opening annually.

There is concern on how the reopening of the economy could affect earnings but the financial performance in FY2022 remains resilient with gross margin continued to expand despite the higher cost.

4. Genting Singapore

Genting Singapore Limited (SGX: G13), which owns and operates the Resorts World Sentosa (RWS) Integrated Resort, home to one of the casinos in Singapore, is among one of the top stock picks that will benefit from the reopening in China.

The return of Chinese tourists will benefit Genting Singapore considering the fact that Chinese tourists accounted for 30-40% of RWS’ VIP volume and one-third of RWS’ gross gaming revenue among the mass market prior to COVID-19 pandemic.

There is concern on Genting Singapore’s valuation given that share price has already increased by more than 20% last year.

However, the reopening tailwind is likely to aid Genting Singapore’s overall financial performance.

As RWS is being recognized as Asia’s Leading Theme Park Resort 2022 by the World Travel Awards, I believe that the return of tourists will benefit Genting Singapore.

There is also the possibility that dividend will return to the 2019 level prior to the pandemic. This would result to a forward dividend yield of around 4.0%.

5. CapitaLand Ascott

Aside from Genting Singapore, CapitaLand Ascott Trust (SGX: HMN), or CLAS, is also another beneficiary of the reopening in China.

CLAS is a hospitality trust with S$8.0 billion of total assets in 47 cities across 15 different countries.

In its latest financial results, CLAS reported an increase of 69% yoy in revenue and 80% yoy jump in gross profit.

Meanwhile, dividend was up by nearly 50%.

With the reopening in China, this will further boost CLAS’ earnings especially from its growth income contributions.

The diversified portfolio with its mix of stable and growth income streams also protect investors against a potential recession.

At current level, it is trading at an attractive forward yield of 6.4%.

Investing in a mix of growth and defensive portfolio

Given the current market uncertainties, I think investors should invest in the right mix of defensive and growth stocks.

Investors should also look at both the short-term and long-term trends including the reopening in China, rising interest rate as well as the transition towards renewable energy.

By taking these into considerations, I believe these 5 stocks allow investors to benefit from the upside in the market while protecting their portfolio from any severe shocks in the market.

Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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