15 Singapore-listed companies that are likely to withstand the tough economic conditions

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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:

  1. Total revenue (more than $100 million) — to have companies with a sizeable scale
  2. Return on equity (between 10 per cent and 30 per cent)  — reveals companies with efficient management
  3. 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.