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Singapore Airlines; Genting Singapore; CapitaLand Ascott Trust: Stocks That Could Benefit From The Return Of Tourism In Singapore

Singaporeans are travelling out just as many international travellers are travelling in.

Tourism is back.

While many of us are capitalising on the strong Singapore Dollar (SGD) to travel to popular destinations such as Japan, Australia as well as other countries in Southeast Asia, Singapore itself has also opened up with many international visitors arriving in Singapore.

The Singapore Tourism Board (STB) expects international visitor arrivals to Singapore to hit 12 million to 14 million in 2023, with full tourism recovery expected by 2024. In August, Changi Airport Group also saw 5.15 million people in air traffic passenger movement, a 55.1% YoY increase. Large-scale events such as the annual Singapore F1 Grand Prix and major concerts that are lined up for 2024 (Taylor Swift, Coldplay) would help sustain the recovery in Singapore’s tourism sector.

In this week’s edition of 4 Stocks This Week, we take a look at some Singapore-listed companies that could benefit as more business and leisure travellers visit Singapore in the coming months.

Singapore Airlines (SGX: C6L)

Unsurprisingly, Singapore Airlines (SIA) (SGX: C6L) has been one of the best-performing stocks on the SGX in 2023 thus far with its share price increasing by about 17% since the start of the year (from $5.49 on 3 January to $6.44 as of 13 October).

Earlier this year, SIA also announced that it has posted a net profit of $2.16 billion for FY22/23, the highest ever in its 76-year history. Group revenue was also at a record $17.78 billion.

While the group is looking to ramp up its service to cater to greater demand among passengers, one possible threat would be the increase in oil prices which would inevitably affect the airline. Any global tensions including the Ukraine-Russia war and Israel-Palestine conflict may also have an effect on international travel which could affect the group.

Read Also: 4 Things To Know About Singapore Airlines (SIA) FY22/23 Results, Its Highest Net Profit In Its 76-Year History

Genting Singapore (SGX: G13)

Genting Singapore (SGX: G13) is best known for its award-winning flagship project, Resorts World™ Sentosa (RWS) in Singapore.

For 1H2023, Genting recorded a profit of $276 million for the period, up from a net profit of $84 million during the same period in 2022. Revenue also went up by 63% to $1.08 billion. Share prices are down by 11.5% since the start of the year (from $0.95 on 3 January to $0.84 as of 13 October) though it’s still up slightly at 7% compared to a year ago.

In the first half of 2023, RWS presented a series of high-profile events and visitor experiences such as the first-ever LIV Golf event in Singapore and Aaron Kwok’s Amazing Kode World Tour 2023 concert. In September 2023, there was also the return of Southeast Asia’s most iconic scare event – Universal Studios Singapore’s Halloween Horror Nights 11, featuring Netflix’s All of Us Are Dead.

CapitaLand Ascott Trust (SGX: HMN)

CapitaLand Ascott Trust (SGX: HMN) (CLAS) is the largest hospitality S-REIT by market capitalisation at about $3.7 billion. CLAS is the largest lodging trust in Asia Pacific, with S$8.1 billion in total assets and 103 properties in 44 cities across 15 countries, including Australia, China, Europe, Japan, U.S. and Singapore. The portfolio spans different lodging asset types, including serviced residences, hotels, rental housing and student accommodation.

In its 1H2023 results, gross profit rose 31% with stronger operating performance and quality acquisitions. Distribution per Stapled Security grew 19% to 2.78 cents in 1H 2023. On a year-to-date basis, share prices are down about 10% and its shares are currently trading at $0.92 (as of 14 October)

CLAS will be looking to make a $530.8 million acquisition of three lodging assets in London, Dublin and Jakarta. Management believes that the acquisitions of these assets will enhance the DPS of the REIT and that these assets are positioned to benefit from the recovery in travel demand. The EGM to vote to approve this acquisition will be on 24 October.

Airports of Thailand TH SDR (SGX: TATD)

Airports of Thailand PLC is the largest publicly traded company in Thailand and the world’s largest airport operator by market capitalisation. It operates Thailand’s 6 international airports, which account for more than 80% of air traffic and provides services related to air transportation. It is 70% owned by the Thailand Ministry of Finance and has a dividend policy of issuing not less than 25% of its net profit each year.

Given its crucial role in facilitating both domestic and international air travel, it is a good proxy for Thailand’s tourism industry, which saw a recovery in 2022–2023 as it beat its target with 11.15 million foreign visitors visiting in 2022. In fact, some of us would have likely travelled to Thailand in recent months.

While this is obviously not a Singapore company, investors can still invest in the Airports of Thailand on the SGX via Singapore Depository Receipts (SDRs). SRS are instruments that represent the beneficial interest in an underlying security listed overseas, which Singapore investors can invest in via SGX. When we invest in the SDRs, we have a beneficial interest in the underlying securities held with the overseas custodian. This entitles us to receive certain benefits, like dividends or share distributions.

Read Also: Guide To Singapore Depository Receipts (SDRs): How To Start Investing In Thai Stocks Through SGX

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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.