Interest Rates Look Set to Stay High in 2024: 4 Singapore Stocks to Give You Peace of Mind

2022 and 2023 will be remembered as the years in which interest rates shot up at the fastest pace in history.

In just five months in 2022, the US Federal Reserve hiked interest rates by 2.36% to counteract the effects of high inflation.

The benchmark rate now stands at between 5.25% and 5.5% and officials have indicated that rates may decline this year if inflation dips towards its long-term target of 2%.

Despite this assurance, interest rates look set to stay higher for longer as the central bank digests data on the economy.

For investors, it is a good idea to look for stocks with either low debt or zero debt that will give you peace of mind.

Here are four stocks with such characteristics that you can add to your buy watchlist.

HRNetGroup Ltd (SGX: CHZ)

HRNetGroup is a recruitment and staffing firm with over 900 consultants spread out across 15 Asian cities.

The group operates well-known recruitment brands such as HRnetOne, Recruit Express, PeopleSearch, and SearchAsia.

HRNetGroup reported a downbeat set of results for the first half of 2023 (1H 2023) because of challenging markets with the global recruitment sector seeing declines in revenue and profitability.

For 1H 2023, revenue dipped by 6.2% year on year to S$294.8 million with net profit falling by 22.8% year on year to S$35.3 million.

Despite the weak results, HRNetGroup maintained a clean balance sheet with S$261.8 million in cash and zero debt as of 30 June 2023.

An interim dividend of S$0.0187 was declared and paid, lower than the S$0.0213 paid out a year ago.

Things could be looking up for HRNetGroup as the economy slowly recovers.

The group recently added a 17th city of operation in Hsinchu, Taiwan, to grow its flexible staffing business.

It has the largest number of professional recruiters among the registered employment agencies in Taipei and Taiwan and sees this expansion as an effective way to grow the overall business.

Haw Par Corporation Limited (SGX: H02)

Haw Par is a conglomerate with four core divisions – healthcare, leisure, property, and investments.

Its healthcare division comprises the famous Tiger Balm brand of pain patches and analgesics.

For 1H 2023, Haw Par saw a sharp recovery that led to revenue growing 16.3% year on year to S$111.1 million.

Net profit climbed nearly 35% year on year to S$104.1 million.

Haw Par maintains a strong balance sheet flush with cash of S$276.3 million along with S$414.2 million of investments in debt securities.

Borrowings stood at just S$28 million.

In addition, Haw Par also generated a healthy free cash flow of S$14.6 million for 1H 2023 while receiving dividend income of close to S$70 million from its investments in United Overseas Bank Ltd (SGX: U11) and UOL Group Limited (SGX: U14).

The owner of Tiger Balm upped its interim dividend to S$0.20 from S$0.15 a year ago.

VICOM Limited (SGX: WJP)

VICOM is a provider of inspection and technical testing services.

The group is a subsidiary of ComfortDelGro Corporation Ltd (SGX: C52) and offers a comprehensive range of testing and inspection services in fields such as mechanical, biochemical, civil engineering, and non-destructive.

VICOM reported a 3% year-on-year increase in revenue for the first nine months of 2023 (9M 2023) to S$83.1 million.

Net profit rose 5% year on year to S$20.5 million.

The test and inspection specialist maintained a clean balance sheet with S$46.9 million of cash and no debt as of 30 September 2023.

Despite spending S$6.1 million on a land parcel at Jalan Papan for its new headquarters, VICOM still generated a positive free cash flow of S$10.5 million for 9M 2023.

VICOM warned that costs remain elevated despite inflation easing somewhat last year.

Its vehicle inspection business should remain stable but its non-vehicle testing business continues to be badly impacted by the weak manufacturing sector.

Sheng Siong Group Ltd (SGX: OV8)

Sheng Siong is a supermarket operator with 69 outlets across Singapore.

The retailer also offers a selection of 23 house brands with more than 1,600 products ranging from food to paper goods.

The group reported a resilient set of earnings for 9M 2023.

Revenue inched up 2.6% year on year to S$1 billion but operating profit dipped by 4.2% year on year to S$115.5 million.

Net profit remained flat year on year at S$100.3 million as interest income more than quadrupled from S$1.8 million to S$8.3 million.

The retailer boasted a clean balance sheet with S$289.2 million of cash with zero debt as of 30 September 2023.

Sheng Siong also churned out a positive free cash flow of S$125.1 million for 9M 2023.

Management had tendered for five HDB shop spaces last year and was awarded one, with three pending outcomes.

The group plans to slowly grow its number of outlets over time, especially in areas where it has no presence.

Five more tenders are projected for the next six months, giving Sheng Siong ample opportunities to bid for these spaces to increase its store count.

By the time your child grows up, inflation will have gobbled up their savings. If you not only want to protect their money but also grow it, there are 3 SGX stocks you can consider buying. One has already proven to give a 55.8% dividend pay rise. Get all the details in our latest special FREE report. Just click here.

Disclosure: Royston Yang owns shares of VICOM.

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