15 Singapore-listed companies that are likely to withstand the tough economic conditions
PHOTO: Unsplash
PUBLISHED ONJune 15, 2020 8:49 AMBySudhan P
The coronavirus has battered many economies of the world, including that of Singapore.
Our small economy could see its worst-ever recession if what the authorities have projected comes true.
The Ministry of Trade and Industry expects Singapore’s gross domestic product to shrink between 4 per cent and 7 per cent in 2020, far worst than the 2.2 per cent fall during the Asian financial crisis in 1998.
Amid such tough times, it is important for investors in the stock market to be especially selective when it comes to picking stocks.
Screening for strong stocks
With the help of a stock screener , I screened out from the 700-odd Singapore stocks some of the companies with strong balance sheets.
Those companies are more likely to withstand the harsh economic conditions brought about by Covid-19 than those that are bogged down by huge amounts of debt.
I used three broad criteria to filter the universe of Singapore-listed stocks. Those criteria and the reasons I chose them are:
- Total revenue (more than $100 million) — to have companies with a sizeable scale
- Return on equity (between 10 per cent and 30 per cent) — reveals companies with efficient management
- Debt-to-equity (between 0 per cent and 20 per cent) — ensures a strong balance sheet
The stock screener revealed more than 20 stocks meeting those three criteria.
From there, I further filtered down the stocks to those that I think are worthy of further research for my own portfolio.
Here, I present to you the 15 stocks from my final list:
| Company | Ticker | Revenue ($' million) |
Return on Equity (%) | Debt/Equity (%) | Price-to-Earnings Ratio | Dividend Yield (%) |
|---|---|---|---|---|---|---|
| SATS | S58 | 1,979.619 | 13.94 | 6.04 | 15.16 | 6.25 |
| VICOM | V01 | 103.703 | 20.14 | 0 | 25.61 | 4.68 |
| SIA Engineering | S59 | 994.1 | 12.28 | 1.26 | 11.47 | 5.56 |
| SBS Transit | S61 | 1445.297 | 15.86 | 15.05 | 11.5 | 4.35 |
| Riverstone | AP4 | 324.146 | 17.41 | 2.82 | 37.27 | 1.14 |
| Venture | V03 | 3,633.431 | 14.99 | 0.08 | 13.03 | 4.29 |
| The Hour Glass | AGS | 755.532 | 13.78 | 5.29 | 5.97 | 4.55 |
| Cortina | C41 | 502.601 | 18.33 | 17.45 | 5.89 | 1.56 |
| HRnetGroup | CHZ | 423.081 | 15.51 | 0 | 9.95 | 5.38 |
| Kimly | 1D0 | 208.299 | 23.39 | 0.09 | 12.34 | 5.21 |
| Challenger | 573 | 329.57 | 18.09 | 0 | 9.3 | 3.16 |
| UMS | 558 | 138.178 | 15.25 | 11.86 | 13.39 | 3.76 |
| Sheng Siong | OV8 | 1,068.582 | 26.11 | 14.82 | 27.21 | 2.31 |
| Valuetronics | BN2 | 501.429 | 18.64 | 0 | 7.15 | 5.89 |
| Straco | S85 | 108.835 | 13.32 | 13.37 | 11.57 | 4.9 |
(Source: SGX Stock Screener; data as of market close on June 3, 2020)
Further research required
As you can see from the list, there are companies that are directly hit by the Covid-19 pandemic, while others like Riverstone and Sheng Siong are thriving in this environment.
A stock screener serves as a useful stock ideas generation tool.
What investors should then do is to dive deeper into the companies sieved out as not all companies may turn out to be great ones for the long-term.
This article is certainly not a recommendation to buy or sell any of the companies mentioned, but to give readers an idea of how to go about finding stocks to invest in.
This article was first published in Seedly.