To The Moon

🌟🌟🌟When the US Consumer Price Index (CPI) runs hotter than expected, Wall Street tends to throw a tantrum.  Unfortunately for investors globally, when America sneezes, the rest of the world reaches for the cold medicine.  A sticky inflation print pushes the Federal Reserve to keep interest rates higher for longer, sending bond yields soaring and giving high flying tech stocks a severe case of vertigo.

Closer to home on the SGX, rate sensitive Real Estate Investment Trusts (REITs) and export heavy tech counters usually bear the brunt of the selloff.  Yet market turbulence is also where defensive gems shine brightest.

Instead of watching your portfolio swing like a pendulum, you can anchor your wealth in businesses selling things that people simply cannot live without: groceries, mobile data and medical care.

3 Defensive Singapore Stocks Built for Sticky Inflation 

$Sheng Siong(OV8.SI)$  - Because People Still Have To Eat 

What Sheng Siong Does:

Sheng Siong is Singapore's 2nd largest supermarket chain, operating over 70 outlets mainly in residential heartland neighbourhoods across Singapore.  It is synonymous with value for money.  Sheng Siong sells every day essentials ranging from chilled produce to dry groceries, together with a growing line of house brand products.

Sheng Siong's Share Performance & Dividend Yield:

Currently trading at SGD 2.32, Sheng Siong offers a dividend yield of 3.25%.  This is backed by a policy of paying out about 70% of its net profit.

While Sheng Siong's stock has delivered around 90% in total shareholder returns in the past 5 years, it recently pulled back about 17.5% over the past month due to rising utility and staff costs.  There is also worry that the upcoming Johor RTS Link could draw shoppers across the border.

Valuation and Target Price:

Following the pullback, Sheng Siong trades at a trailing P/E ratio of 22.2x, making it fair valued for a high quality retailer.

Analyst Target Price ranges from SGD 2.70 to SGD 3.20, implying an upside potential of around 21%.

Why Sheng Siong Is A Great Buy:

Clearing customs and lugging heavy bags of fresh produce and frozen chicken across the Causeway is a major hassle - especially for weekday dinner prep.

When inflation bites, families skip pricey restaurant meals and walk downstairs to their neighbourhood Sheng Siong to cook at home.  

This has pushed Sheng Siong's 9 month revenue up nearly 10% year on year to SGD 1.3 billion while its debt free balance sheet keeps rising interest rates harmless.

$Singtel(Z74.SI)$  - The Utility You Check 100 Times A Day 

What Singtel Does:

Singtel is Asia's leading communications technology group.  It provides mobile, broadband and pay TV services alongside enterprise cloud, cybersecurity and data centre infrastructure through its Nxera arm.

Beyond Singapore and Optus in Australia, Singtel holds strategic stakes in regional telecom giants.  These include Airtel in India, Telkomsel in Indonesia, AIS in Thailand and Globe in Philippines.

Singtel's Share Price Performance & Dividend Yield:

Trading at SGD 4.11, Singtel rewards shareholders with a generous dividend yield of 4.5%.  It is currently down 10.26% year to date.

Singtel's 1H FY2027 Earnings Report:

Singtel posted a 6% rise in operating revenue to SGD 7.29 billion and a 10% jump in underlying net profit to SGD 1.49 billion.  This was driven by double digit operating earnings growth across NCS, Digital InfraCo and Optus together with stronger contributions from Airtel and AIS.

Management raised its full year EBIT growth guidance to mid to high single digits. It also  increased its interim dividend up 10% to 9 cents per share payable on 11 December 2026.  This builds on its prior full year payout of 18.5 cents and an ongoing SGD 2 billion share buyback program.

Singtel Valuation and Target Price:

Trading at around 19x to 21.8x earnings, Singtel is undervalued relative to its accelerating growth and the hidden value of its regional stakes and Nxera data centres.

Singtel has a consensus Buy rating with target price ranging from SGD 5.25 and SGD 5.35, an upside potential of 26% to 30%.

Why Singtel Is a Great Buy 

People might cancel their gym membership or postpone buying a new car during a downturn.  But they need their mobile data and home WiFi, making Singtel a cash flow fortress.

$Raffles Medical(BSL.SI)$  - Health Is Wealth 

What Raffles Medical Does:

Raffles Medical Group is an integrated private healthcare provider in Asia, operating the flagship Raffles Hospital in Singapore alongside over 100 multidisciplinary clinics, dental practices and medical centres across Singapore, China, Vietnam, Cambodia and Japan plus health insurance and consumer healthcare divisions.

Raffles Medical Share Price Performance and Dividend Yield:

Trading at SGD 0.84, Raffles Medical pays a steady dividend yield of 3.57%.  Its share price is down 17.65% year todate as post pandemic hospital normalisation and gestation costs at its newer China hospitals weighed on near term sentiment.

Raffles Medical Valuation & Target Price:

Raffles Medical trailing P/E ratio is 21.1x, reflecting slower near term earnings.  It is undervalued on a discounted cash flow basis thanks to its SGD 93.7 million in annual free cash flow.

Consensus Target Price is SGD 1.05 with DBS, Maybank and RHB maintaining Buy ratings, an upside potential of 25%.

Why Raffles Medical is a Great Buy:

Illness does not check the Federal Reserve's meeting calendar before showing up.  With a rock solid net cash balance sheet plus an active share buyback program, Raffles Medical lets  you buy a blue chip healthcare conglomerate at a discount while collecting tax free dividends.

Valuation Summary: Are These 3 Stocks Cheap?

None of these 3 are deep value bargain bins trading at single digit P/E ratios as investors pay a quality premium for defensive Singapore blue chips.  However all 3 offer 21% to 30% upside to analyst targets.

Best Growth Adjusted Value: 

Singtel, thanks to double digit underlying profit momentum and regional growth.

Best Contrarian Cash Flow Value:

Raffles Medical , if you are willing to wait for its China hospitals to break even.

Best Quality At A Fair Price:

Sheng Siong, where the recent pullback has removed the speculative froth.

The Bottom Line:

Higher US inflation and stubborn interest rates might make the stock market feel like a roller coaster, but you don't have to ride it without a seatbelt.

By anchoring your portfolio in cash rich, dividend paying Singapore champions, you let every day consumer habits work in your favour regardless of what the Fed does next.

As legendary investor Peter Lynch famously said:

"Know what you own and know why you own it."

When you own the supermarket chain Sheng Siong, the phone network Singtel and the medical conglomerate Raffles Medical, you can sleep soundly at night, even on CPI release days.

@Tiger_SG  @TigerStars  @Tiger_comments