Top 3 Singapore Travel and Hospitality Stocks You Can’t Miss

May 24, 2023

The recovery of the tourism industry continues into 2023 after a strong rebound in 2022.

According to the Singapore Tourism Board (STB), visitor arrivals to the city-state reached 1.1 million in April 2023, the highest monthly total since the pandemic.

As of 30 April, Singapore has welcomed over 4 million visitors in 2023.

The forecast for the full year is 12 to 14 million international visitors, with tourism revenue estimated to reach between S$18 billion to S$21 billion.

This has led to a strong demand for travel and hospitality stocks.

To put into perspective, the 10 most traded stocks that represent the travel and hospitality industries have generated an average of 1.3% gain during the first 20 weeks of 2023 ending 18 May as compared to Singapore’s Straits Times Index (STI)’s total return of 0.3%.

Net institutional inflows into these stocks were at S$186.7 million as compared to the net institutional outflow of S$2.3 billion for the broader Singapore market.

With so much interest in the Singapore’s travel and hospitality stocks, here are the top 3 names that you won’t want to miss.

1. Genting Singapore

Genting Singapore Limited (SGX: G13) led the Singapore market in net institutional inflows year-to-date (YTD) ending 18 May 2023.

The casino operator and owner of Resorts World Sentosa (RWS), one of the largest fully integrated destination resorts in Southeast Asia, has benefitted from the return of tourists to Singapore.

Genting Singapore reported strong earnings growth in the Q1 FY2023 as revenue and earnings before interest, tax, depreciation and amortization (EBITDA) grew by 54% and 56% respectively.

The ongoing recovery of regional travel and gaming demand has supported its earnings growth but it has fallen short of analysts’ expectations.

Despite of that, Genting Singapore will continue to focus on its expansion strategy with the RWS 2.0 strategy, which includes a S$4.5 billion expansion project over different phases.

Among some of them includes the Minion Land at Universal Studios Singapore and the Singapore Oceanarium that are expected to schedule for soft opening by early 2025.

This is in line with Genting Singapore’s strategy to position itself as a premium luxury destination that appeals to affluent customers.

2. SIA

Singapore Airlines Ltd (SGX: C6L), or simply known as SIA, has also returned to investors’ radar as it posted its highest net profit in over seven decades.

For the first 20 weeks of 2023, SIA was the best performer among the travel and hospitality stocks with a total return of 10.1%.

Revenue for FY2023 jumped by 133.4% to S$17.8 billion from a year ago while net profit hit a record high of S$2.16 billion.

This was a reversal of the net loss of S$962 million recorded in FY2022.

The strong results were mainly due to strong demand for air travel as international travel resumed.

Both its carriers, SIA and Scoot, were among the first to launch flights and capture the pent-up demand upon the reopening of borders.

Going forward, SIA will capitalize on the strong momentum and position itself as a global aviation leader in the post-COVID era.

Riding on the recovery momentum, SIA noted that demand for air travel remains robust in the first quarter of FY2024, underpinned by the recovery in air travel in East Asia.

However, inflationary pressures, geopolitical tension and high fuel cost could drag on earnings growth going forward.

3. CapitaLand Ascott Trust

Among the Singapore REITs that are involved in the travel and hospitality industry, CapitaLand Ascott Trust (SGX: HMN) is the most actively traded.

In the business update for the first quarter of 2023, CapitaLand Ascott Trust or simply known as CLAS, announced a significant rise in gross profit by 59% on a year-on-year basis.

The increase can be attributed to a robust operational performance and the positive impact of new properties added to its portfolio.

Remarkably, the trust recorded a 90% YoY surge in Revenue per Available Room (RevPAU) in key markets including Australia, Japan, Singapore, and the USA, all of which demonstrated a performance at or above pre-pandemic levels.

Most noteworthy was the performance in Japan, where CLAS reported a substantial 351% YoY leap in RevPAU, reaching 105% of the pre-Covid levels of the same stores.

This boost followed Japan’s decision to reopen its borders to independent leisure travelers in October 2022.

With recovery in the tourism industry expected to continue, I believe CLAS is poised to increase its distribution per unit (DPU) in 2023.

Remarkable recovery for travel and hospitality stocks

We have seen remarkable strides in the recovery of travel and hospitality stocks from the impacts of COVID-19 pandemic.

While uncertainties persist in the face of inflationary pressures, geopolitical tensions, and high fuel costs, I believe these three stocks, Genting Singapore, SIA and CLAS, serve as examples of how crises can be turned into opportunities for growth and transformation.

Their resilience and strategic adaptation to the challenging economic climate exemplify the potential for rejuvenation in the travel and hospitality sector.

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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