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3 Best Singapore Blue-Chip Stocks to Consider for Your Portfolio

Investors don’t have to venture out of the Straits Times Index (SGX: ^STI) to look for great companies to invest in. Using a stock screener, I teased out three index components with decent earnings growth, a strong balance sheet, and a respectable return on equity (ROE). All three companies pay a dividend as well. With that, let’s check out those three blue-chips.

Company #1

Singapore Exchange Limited (SGX: S68), or SGX, is the only stock market operator here providing listing, trading, clearing, settlement, depository and data services.

From FY2014 to FY2018 (the company has a 30 June year-end), Singapore Exchange’s earnings climbed from S$320 million to S$363 million, an increase of around 3% per annum. The growth came on the back of its revenue rising from S$686 million to S$845 million during the same time frame.

  Singapore Exchange
Net profit growth 3.2%
Loans-to-equity ratio 0
ROE 34.1%

Source: Company annual report; author’s compilation

As of the end of June 2018, Singapore Exchange’s balance sheet carried S$831.6 million in cash with zero debt. It had an ROE of 34%, which is considerably high.

Singapore Exchange’s current share price is at S$7.58, translating to a price-to-earnings (PE) ratio of 22 and a dividend yield of 4.0%.

Company #2

Founded in 1984 and headquartered in Singapore, Venture Corporation Ltd (SGX: V03) is a global electronics services provider that can support design, manufacturing, and e-fulfilment for high-mix, high-value and sophisticated products.

In terms of historical growth, Venture’s earnings have climbed from S$139.8 million in FY2014 to S$370.1 million in FY2018 (the company has a 31 December year-end). During the same period, revenue grew from S$2.47 billion to S$3.48 billion.

  Venture
Net profit growth 27.6%
Loans-to-equity ratio Negligible
ROE 16.4%

Source: Company annual report; author’s compilation

As of 31 December 2018, Venture had a strong balance sheet with a cash position of S$712.8 million and just S$1.8 million in debt. The company clocked an ROE of around 16% in FY2018.

At Venture’s current share price of S$16.75, it has a PE ratio of 12 and a dividend yield of 4.2%.

Company #3

SATS Ltd (SGX: S58) is a provider of food solutions and gateway services solutions. Under the food solutions business, it provides services such as in-flight catering and institutional catering. Under the gateway services solutions segment, it is involved in ground handling, security services, and baggage handling, among others.

SATS’ net profit grew from S$195.7 million in FY2014-15 to S$248.4 million in FY2018-19 (the company has a 31 March year-end), which translates to an annualised growth of 6%.

  SATS
Net profit growth 6.1%
Loans-to-equity ratio Negligible
ROE 15.1%

Source: Company annual report; author’s compilation

SATS had a cash balance of S$349.9 million and a total debt of S$95.7 million, as of 31 March 2019. The company delivered an ROE of 15% at the end of FY2018-19.

At SATS’ current share price of S$5.11, it has a PE ratio of 23 and a dividend yield of 3.7%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange and SATS. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange and SATS.