In poker, the “blue chip” is considered the chip that has the highest value. In stock market terms, this refers to nationally recognised, well-established, and financially sound companies.
They are typically the largest listed companies in Singapore by market capitalisation, and a synonym for STI ETF.
Blue chip are known to be relatively stable due to their strong balance sheet and dominant market position; making them difficult to fail and capable of riding out financial crisis during bad market cycles.
There is a reason why so many Singaporean prefer to invest blue chip stocks, mainly because of its perceived certainty, which means less risk, and they are often common household names like M1 and SPH, which most Singaporean investors can relate to.
Blue chips are also often backed up by large institutional investors which makes their prices less susceptible to speculation.
Below are the top 10 largest blue chip stocks we think all Singaporean should know.
#1 DBS Group Holdings Ltd
Mkt Cap: $61.72B | P/B: 1.3 | Div Yield: 4.97%
DBS is the largest bank by assets in Singapore. It has over 280 branches across 18 markets in Asia. This blue chip stock is one of the 30 constituents of Singapore’s market barometer, the Straits Times Index. DBS’ principal activities include:
- Investment holding
- Banking and financing, provision of mortgage financing, lease and hire purchase financing
- Corporate advisory services
- Nominee and trustee services, funds management services
- Stock broking
- Primary dealership in Singapore Government securities
- Merchant banking and factoring
- Credit card and venture capital operations
Furthermore, the bank is known to buy from its own shares. In just fourteen days, from September 1, 2016 to September 14, 2016, it has brought back shares of itself on six occasions spending a total of nearly S$23.5 million on 1.5497 million shares.
For the second-quarter of 2016, DBS saw their quarterly total income growth of 8% year-on-year; turning in S$2.92 billion of total income. As of September of this year, DBS has seen a major gain in the back’s value with more than 30%.
#2 Oversea-Chinese Banking Corporation Limited
Mkt Cap: $48.4B | P/B: 1.15 | Div Yield: 3.43%
Like DBS, Oversea-Chinese Banking Corporation Limited or OCBC, is one of the top three major banks in Singapore. They offer a wide range of banking services and financial solutions:
- Consumer banking
- Business banking
- International banking
- Global treasury and investment management
They also have diverse subsidiaries involved in:
- Financial futures
- Regional stock broking, trustee, nominee and custodian services
- Property development and hotel management
For the Q3 of this year, OCBC has proven to maintain above 100% of their NPL coverage ratio.
Its pre-provision income growth has remained healthy as supported by continued growth in fee income from wealth management and bank assurance businesses, as well as a modest widening of net interest margins (NIM). OCBC’s NIM for Q3 rose to 1.66%. This is as reported by MSN.
OCBC has also been the very technologically active in their services this 2017. Just this year, OCBC became the first Singaporean bank to test AI to fight financial crime. Furthermore, OCBC has another AI powered chatbot called “Emma”.
As of November, Emma has helped seal over S$70 million in home loans since the beginning of the year (Straits Times).
#3 United Overseas Bank Limited (Singapore)
Mkt Cap: $42.909B | P/B: 1.164 | Div Yield: 3.7%
Completing the triad that makes up Singapore’s biggest banks is the United Overseas Bank Limited (Singapore), UOB for short. As part of the trio, UOB makes up 10.1% out of the three’s collective 35.3% of the Straits Times Index.
Like the two, it offers an array of financial services but this time, through its global network of branches/offices and subsidiaries/associates. Its services include:
- Personal financial services
- Private banking
- Trust services
- Commercial and corporate banking
- Investment banking
- Corporate finance
- Capital market activities
- Treasury services
- Futures broking
- Asset management
- Venture capital management
- General insurance, life assurance
- Stock broking services
In the last two months before October, UOB together with the three advanced Singapore’s FTSE Straits Times index by 0.7%. This has been recorded the highest since August 14 which resulted from banks gaining ahead of the monetary policy decision and the advanced after earnings of Singapore Press Holdings.
Furthermore, like OCBC, UOB has employed two AI robots named Amy and Eve. They have increasingly helped the banks’ functions by cutting down more than half of the data processing time.
This serves very helpful to human employees as well since they can now focus more on stimulating and challenging jobs, according to UOB.
#4 Singapore Telecommunications Limited
Mkt Cap: $49.789B| P/B: 1.9 | Div Yield: 5.78%
Another high-ranking blue chip stocks you should know about is the Singapore Telecommunications Limited—also known as SingTel.
Unlike the three above, SingTel is a global communications technology company in Asia based in Singapore that provides a diverse range of services within the communications business to cater the needs of their consumers.
These services are:
- Mobile and fixed-line voice and data,
- Narrow band and broadband Internet services
- Integrated Information Technology and communications solutions
SingTel has been operating for an experience amount of time with more than 125 years in the industry.
Between the financial year ended on March 31, 2015 (FY) and FY2017, SingTel has yielded a dividend of 4.63% which was consistently paid out through that time.
For the first half of the FY1018, it has paid an interim dividend of 6.8 cents and topped it off with a special dividend of three cents. The latter came from its stake in NetLink NBN Trust.
#5 Jardine Matheson Holdings Limited
Mkt Cap: $21.071B| P/B: 0.96| Div Yield: 2.44%
Jardine Matheson Holdings Limited is a multinational enterprise that conducts an array of operations internationally—from Greater China and Southeast Asia to the United Kingdom—which ranges from:
- Engineering and construction
- Transport services
- Insurance broking
- Property investment and development
etailing, restaurants, and luxury hotels
- Motor vehicles and related activities
- Financial services
- Heavy equipment, mining, and agribusiness fields
For this reason, it is not hard to see why Jardine Matheson Holdings Ltd is ranked 6th in The Motley Fools website among the”10 Most Important Blue Chips in the Straits Times Index” this 2017.
It holds stakes in Jardine Cycle & Carriage Ltd, Hongkong Land Holdings Limited, and Jardine Strategic Holdings Limited. With these three, Jardine holds 15.5% of the Straits Times Index.
#6 Hongkong Land Holdings Limited
Mkt Cap: $16.31B | P/B: 0.44 | Div Yield: 2.88%
Following its stake holder, Hongkong Land Holdings Limited works as a property investment, management, and development company. It now owns and manages prime office and luxury retail property that covers an approximate of 800,000 square meters of property in Asian cities.
This is especially true in Hong Kong and Singapore with 450,000 square meters and 165,000 square meters, respectively. The company’s segments are Commercial, Residential, and Corporate Property.
Hongkong Land Holdings Limited mainly holds its income in investment properties from Hong Kong and Singapore; making up 97% of the total.
For its development properties, the company’s completion of residential units in mainland China as well as the recognition of profit on the Lakeville project in Singapore brought in many improvements in profitability compared to last year.
The beginning of 2017 saw a lot of improvements from Hongkong Land Holdings Limited. It is projected for further improvements once the year is over. (The Motley Fool)
#7 Keppel Corporation Limited
Mkt Cap: $11.13B | P/B: 0.98 | Div Yield: 3.93%
The Keppel Corporation Limited works in a range of businesses that range from offshore to marine under areas of:
- Property investment and development
- Telecommunications and transportation
- Energy, and engineering
It is comprised of a group of companies which includes: Keppel Offshore and Marine, Keppel Integrated Engineering, Keppel Energy, Keppel Telecommunications and Transportation, K-Green Trust, Keppel Land and K-REIT Asia (S-REIT), among others.
Keppel Corporation Limited is ranked 8th in The Motley Fool website among the “10 Blue Chip Stocks in the Straight Times Index”; occupying a weighted average of 3.1%. Furthermore, just this November, the same website reported an impressive gain of over 41% in the company’s
#8 Jardine Strategic Holdings Limited
Mkt Cap: $20.735B| P/B: 0.67 | Div Yield: 0.88%
Under the group with the same name, Jardine Strategic Holdings Limited is mainly associated with Jardine Matheson, Dairy Farm, Hongkong Land, Mandarin Oriental, and Cycle and Carriage. With them, it works in a number of operations such as:
- Auto distribution
- Food and retailing
- Property investment
- Property development
- Hotel operations
Jardine Strategic Holdings Limited is deemed as one in the Straits Times Index to have the highest share prices at around S$50.38 (US$40.02) each.
Also, in just a span of ten years, the company’s price has increased by more than 1490% from US$2.55—which, according to The Motley Fool, is not bad considering the 170% rise made by the Straits Times Index.
#9 Global Logistic Properties Limited
Note: GLP was delisted from SGX on 22 Jan 2018 at a $12 billion buyout from a consortium of Chinese investors.
Global Logistic Properties Limited or GLP is an investment holding company that owns, manages, and develops logistics facilities. It is considered as “one of the largest providers of modern logistics facilities in Asia”.
The company owns, manages, and leases out a broad network that is comprised of 295 completed properties within 122 integrated parks. Aside from logistics, it also serves manufacturers in:
- Auto and parts
- Pharmaceuticals/medical instruments
Over the last three months before January 2017, Global Logistic Properties Limited’s share price rose to 48% to S$2.60 with a price-to-book ratio of just 1.
#10 Thai Beverage Public Company Limited
Mkt Cap: $18.331B| P/B: 5.0 | Div Yield: 1.63%
Thai Beverage Public Company Limited is a beverage company that works, together with its subsidiaries, to produce and distribute both alcoholic and non-alcoholic beverages in Thailand and other international countries. It operates through the following four segments:
- Non-Alcoholic Beverages
This Thailand-based food and beverage company is also ranked 8th by The Motley Fool among the “10 Blue Chip Stocks in the Straight Times Index” with the same weighted average of Keppel Corporation Limited of 3.1%.
Co-Founder. Believer of the Factor-based Investing approach. Running a Multi-Factor Portfolio that taps on the Value, Size, Profitability and Momentum Factors. Quant at heart. Believe the financial industry can treat their customers better. Wants to change the world.