Analysts from CGS-CIMB Research, DBS Group Research, OCBC Investment Research (OIR) and RHB Group Research are positive on the aviation, aerospace, tourism sectors, as well as consumer manufacturing and retail sectors, following the unveiling of the Singapore Budget for 2021.

Deputy Prime Minister and Finance Minister Heng Swee Keat, on Feb 17, revealed that the government will be providing targeted support for sectors that were more negatively impacted by the Covid-19 pandemic.

See: Government injects additional $11 bil in Covid-19 relief measures; GST hike to come between 2022 to 2025

Extended Jobs Support Scheme (JSS)

The government will be extending the JSS for another six months for Tier 1 sectors such as aviation, aerospace and tourism, benefitting companies such as Singapore Airlines (SIA), SATS, SIA Engineering, Genting Singapore and Singapore Technologies Engineering.

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See also: JSS to be extended for hardest-hit companies until September 2021

Under the extension, firms under Tier 1 sectors will receive 30% of support for wages from April to June, and another 10% from July to September.

On the tapered wage support from July to September, CGS-CIMB analyst Lim Siew Khee believes this was calibrated to factor in partial re-opening in travel borders at Changi Airport.

Based on her calculations, Lim estimates that SIA may receive payments from the JSS amounting to some $48 million to $60 million, which comes up to 3.8% to 4.7% of her FY2022 core net loss estimate of $1.26 billion for the airline.

Similarly, Lim sees that the JSS extension could help reduce SATS’s staff costs by some $22 million for FY2022, or 2% of its operating expenses (opex).

“We have factored in staff costs to increase by 34% y-o-y in FY2022 as government relief tapers,” she says.

For SIA Engineering and ST Engineering, the extension of the JSS could help alleviate costs by $15 million and $13 million respectively.

There was no amount disclosed for Genting Singapore.

The team at DBS led by Yeo Kee Yan believe that SIA, SATS, SIA Engineering and ST Engineering will receive between $40 million to $50 million, $30 million to $40 million, $20 million to $30 million and $30 million to $40 million from the JSS extension respectively.

Hoteliers, under the tourism sector, will also stand to benefit from the extension.

However, the team sees this as a positive for hospitality REITs such as CDL Hospitality Trusts and Far East Hospitality Trusts as “it boosts the likelihood of tenants maintaining their rental income obligations and leases”.

The way the team at OCBC sees it, global passenger traffic is not expected to return to pre-Covid-19 levels till 2024, according to the International Air Transport Association (IATA).

As such, it views the extension of the JSS as “positive” for SIA, SATS and SIA Engineering, “which benefitted from declines in their group expenditures over the past few quarters, thanks to government support schemes and cost-saving initiatives”.

“Moreover, the government also aims to invest in on-arrival testing and biosafety systems to secure Singapore’s position as a key aviation hub. The upgraded capabilities to enable safe travel could further aid SIA’s recovery, in our view,” adds the OCBC team.


ComfortDelGro (CDG) is yet another beneficiary of the JSS, although, as a Tier 2 sector, where the government will provide 10% wage subsidies for another three months, Lim sees the measures as having “minimal incremental help” for the transport operator.

The $133 million Covid-19 Driver Relief Fund was previously announced by the Land Transport Authority (LTA) in December 2020, while the group’s rail and taxi operations, which make up a small proportion of its workforce, can be qualified under the JSS extensions.

The public bus segment, which accounts for majority of CDG’s workforce, will not qualify for the extensions after March.

To the team at OCBC, “such funds [like the Covid-19 Driver Relief Fund] are important… its taxi operation has been the main drag in 2020, with operating loss of $64.4 million”.

“The group’s taxi fleet stood at 9,444 taxis (about 60% [are] hybrid) as at Dec 2020, which was around 12% lower compared to Dec 2019. Current utilization level is around 95%,” it says.

The company may be slightly impacted by the higher petrol duties, but not much, according to the team at DBS.

“60% of its 9,500 taxi fleet numbers are hybrid and only a small handful are electric vehicles (EV). We do not see an immediate fleet migration to EV as conversion to hybrid had started in 2017,” it says.

“As such, it would have to bear the higher petrol duties should it decide to absorb the additional tax for its hirers, although this is partly offset by the 15% rebates on road tax in the near term. However, as we estimate such costs to be less than 5% of total operating expense, the impact of higher petrol duties and tax rebates would be negligible. Driver relief would help to support taxi hiring rates,” it adds.

Jobs Growth Incentive (JGI)

Under the JGI, which was increased to $5.2 billion from $3 billion to extend the hiring window till end-September, Lim foresees HRNetGroup to be a beneficiary of the scheme, with the government looking to hire 200,000 workers in 2021.

See also: Singapore announces $24 bil plan to transform businesses and workers over next three years

“Currently, this represents 4.3% of our total permanent placement projection (8,600) in FY2021,” she writes.

“If HRNetGroup could capture 5% of this market (10,000 permanent placements), this could see our initial projections of core PATMI in FY2021 increase by 20.8% y-o-y from $45.8 million to $55.3 million, or a 23.2% growth from pre-Covid-19 levels (from our previous +2.0% estimate), assuming all other variables stay constant,” she adds.

GST for low value import goods

The introduction of GST for low value import goods will increase prices of goods purchased from e-commerce stores such as Taobao, Shopee, Lazada, Qoo10 and Amazon.

See also: GST to be imposed on imported low-value goods, B2C imported non-digital services from 2023

According to SingStat’s December 2020 numbers, mass manufactured goods purchased from such online platforms currently make up 11% of the total retail sales in Singapore.

Following this, the team at DBS sees this as a plus for retailers, as it creates a more even ground between physical retailer and their online competitors.

“Consumers may be less motivated to channel their purchases online, thus mitigating the potential downside risks for retail S-REITs [such as] Frasers Centrepoint Trust, CapitaLand Integrated Commercial Trust, Lendlease Global in the medium term,” it says.

See also: Some cheer for REITs unitholders

The expected implementation of a GST hike between 2022 and 2025 may result in consumers doing their shopping before the hike, which could lead to a pick-up in overall retail sales in 2021 and 2022, note the team.

“This will be an added boost for retail S-REITs in the medium term who are able to benefit from the variable rent component of their lease structures (ranging 3% to 5% of overall retail revenues),” it adds.

Supermarket stocks

Retailers such as Sheng Siong and Dairy Farm may also benefit from the Household Support Package, where the government will spend about $900 million on lower to middle income families in the form of GST Vouchers, notes the team at DBS.

Healthcare salary rises

The salary increases for nurses and other healthcare workers in public sectors may put “staff costs pressures” on private healthcare providers such as Raffles Medical and IHH Healthcare, especially as borders remain closed for foreign patients.

“That said, Singapore’s vaccination efforts and aviation support measures could hasten the relaxation of border restrictions, which could unleash pent-up demand from foreign patients sooner. We currently have a ‘buy’ call on IHH and ‘hold’ call on Raffles Medical,” says the team at DBS.

Property stocks

The budget stood silent on property-related news despite anticipation that policy tweaks may be on the horizon, which gave buyers and listed developers such as City Developments (CityDev), UOL and Bukit Sembawang.

However, the DBS team says that this should not be taken as a sign that potential cooling measures are off the table.

“The performance of the property market will remain in ‘close observation’ from the authorities in the coming quarters, in response to pent-up demand and a low interest rate environment. We maintain our view that the authorities will remain pre-emptive in their approach towards preventing a rise in the property price index (PPI) which is not supported by fundamentals,” it says.

Manufacturing sector

Despite the tightening of the foreign worker quota, RHB analyst Shekhar Jaiswal expects Venture Corporation and Frencken to mitigate the near-term impact by increasing production at their overseas production bases, while continuing to train and hire locals in Singapore.

“Opportunities could also open up for the manufacturing sector, as the Government continues to reinforce the importance of the country’s strong connectivity in global and regional supply chains, and push Singapore as a regional distribution hub,” he says.