These 3 Companies May See a Strong Recovery in 2021

2021-03-08     thesmartinvestor
These 3 Companies May See a Strong Recovery in 2021

The tide looks to be turning against the coronavirus.

With the development and dissemination of multiple COVID-19 vaccines, the war is slowly but surely being won against our common foe.

And when battered economies recover, businesses that suffer depressed demand should see their prospects improve greatly.

Stocks that have cut their dividends last year could reinstate their payouts.

With that in mind, here are three companies that could see a strong recovery once things get better this year.

HRNetGroup Ltd (SGX: CHZ)

HRNetGroup is a leading recruitment and staffing company with over 900 consultants in 13 Asian cities.

The group owns a total of 12 brands such as HRNetOne, Recruit Express and PeopleSearch.

The pandemic has led to a fall in the number of professional placements as companies freeze hiring to control costs.

HRNetGroup saw placements fall 17.7% year on year to 7,022.

However, the number of contractor employees rose 13.7% year on year to 14,347 as more companies turned to short-term contracts.

Taken together, group revenue inched 2.4% higher year on year to S$433 million, but net profit declined by almost 11% year on year as flexible staffing (i.e. contractors) carried a lower gross margin of 15.5% compared to professional recruitment’s 99.7%.

A recovery in the Asian region should see businesses start to hire again once demand rebounds.

In turn, this rebound will benefit HRNetGroup’s professional recruitment division as companies open their wallets once again.

Despite the weaker results, the group still declared a final dividend of S$0.025, down from S$0.028 a year ago.

Centurion Corporation Ltd (SGX: OU8)

Centurion Corporation owns, develops and manages a portfolio of 35 accommodation assets with around 73,500 beds as of 31 December 2020.

These assets include worker accommodation assets in Singapore and Malaysia and student accommodation assets located in Singapore, Australia, South Korea, the US and the UK.

The group chalked up a 5% year on year decline in revenue to S$128.4 million for its full-year 2020.

This drop was due to lower occupancies for Centurion’s student dormitories in the UK and Australia as the pandemic forced many to remain at home rather than stay on campus.

The group’s workers accommodation asset in Singapore was negatively impacted by lower occupancy during the second quarter of 2020.

Also, an impairment loss arising from fair value losses on properties of S$27.6 million in 2020 caused net profit after tax to plunge 83% year on year.

Stripping out the effects of fair value gains, net profit from core operations rose 8% year on year.

When lockdowns are eased, students should slowly trickle back to their university campuses and push the occupancy rates for Centurion’s student accommodation assets.

The group is not standing still, though.

In November last year, it secured a lease to manage a purpose-built workers’ dormitory located in Selangor, Malaysia, enlarging its portfolio by more than 5,000 beds.

Venture Corporation Ltd (SGX: V03)

Venture Corporation is a global provider of technology solutions, products and services.

The group serves a variety of key industries such as life sciences and medical equipment and employs over 12,000 around the world.

For its full-year 2020 earnings, Venture reported a 17% year on year decline in revenue to S$3 billion due to disruptions in supply chains caused by the pandemic.

Consequently, net profit after tax fell by 18.4% year on year to S$102.2 million.

However, the group maintains a strong balance with S$928.7 million in cash as of 31 December 2020 with zero debt.

And despite the weaker earnings, free cash flow increased from S$256.7 million in 2019 to S$470.9 million in 2020.

Venture’s outlook is brightening as it intends to increase its participation in the robotics and artificial intelligence domains, both of which are growing steadily.

Another promising domain is that of the Battery Electric Vehicle industry which the Singapore government has been actively promoting.

Also, the projected growth in semiconductor sales of 8.4% in 2021 by the World Semiconductor Trade Statistics should bode well for Venture’s prospects.

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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.

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