In part two of this 4-part series, we continue to highlight three SG stocks that deserve to be part of The Avengers’ investment portfolio.
Investors Takeaway: Which SG Stock Deserves To Be Part Of “The Avengers”?
- The Hulk: ComfortDelgro
Like The Hulk, ComfortDelgro Corporation has been undergoing multiple transformations to turn its weakness into incredible strength.
Turning Around Its Taxi Business
Following a fleet renewal programme, ComfortDelgro is doing its best to turn around its Taxi business. Since the acquisition of Uber, Grab has pulled away from a price war. ComfortDelgro shareholders can be assured that there wouldn’t be a prolonged exodus of drivers to private-hire cars again.
Strength In Bus, Rail Business Remain Intact
ComfortDelgro’s bus business is the most stable among its portfolio of business. It recently added to the bus business in Singapore, Australia and UK, which should contribute positively post-integration. Losses for the rail segment are also narrowing since the commencement of the Downtown Line 3 in October 2017. The transition to asset light model for Singapore bus and rail has given ComfortDelgro a sustainable cashflow position and renewed optimism in ComfortDelgro’s dividend yield.
Current share price $2.63
- Vision: Singapore Exchange
Volatility and uncertainty is seldom good news for a company, but that is unless you are Vision or, the Singapore Exchange (SGX).
Riding On Derivatives
Volatility and uncertainty is a driver for greater need for risk management among investors as investors seek derivatives to hedge their portfolio. In the previous quarter, SGX’s derivatives volume spiked due to China A50 because of the heightened trade tensions between US and China. Besides that, as more funds move into emerging markets, the need to hedge portfolios will also increase. This will help drive the growth of SGX’s financial futures market.
Riding On Higher Interest Rates
The rising rate environment is also creating a benign environment for SGX to improve its collateral management income. Higher interest rates will enable SGX to generate more income from higher open interest that customers pay as well as investing margin deposits for higher yield.
Current share price $7.34
- Spiderman: China Sunsine
Small Cap But Lots Of Potential
Just like Spiderman, China Sunsine packs a lot of potential. China Sunsine is the largest producer of rubber accelerators in the world and the largest producer of insoluble sulphur in China. Thanks to its track record, it has been recognized as a quality producer in the market. Besides that, China Sunsine has also built a strong and long-term business relationship with top tier tyre producers. These factors have helped China Sunsine to secure a leading position in this niche market.
Investing In Production Capacity Expansion
With FY18 sales growing by ten percent year-on-year for its major products, China Sunsine’s production capacity has started to hit its peak. As such, China Sunsine has been investing in its production to grow its production capacity. The new capacity will enter into production in 2019, which will translate to greater sales for China Sunsine.
China Sunsine is also conserving its cash in preparation for future capacity expansion. China Sunsine has been sitting on a cash hoard that continues to be increasing. Its cash hoard is expected to hit Rmb 1 billion, which is around one-third of its market cap.
Current share price $1.14