SIA, Keppel, or ST Engineering: Which Blue-Chip Still Offers Upside After the Rally?

Core Insights - Several blue-chip stocks in Singapore have experienced significant rallies, raising questions about future upside potential as valuations increase [1] - The analysis focuses on three prominent companies: Singapore Airlines Ltd, Keppel Ltd, and Singapore Technologies Engineering Ltd, assessing their long-term investment viability post-rally [2] Singapore Airlines - Singapore Airlines (SIA) shares have appreciated due to the global travel market recovery, currently trading near a 52-week high of S$7.63, with a market capitalization of approximately S$21 billion [5] - For FY2024/2025, SIA reported a net profit of S$2.78 billion, aided by a one-off gain from the Air India-Vistara transaction, while the half-year FY2025/2026 results showed a normalizing net profit of S$239 million [5] - The operating margin has normalized to around 8.3%, with a trailing dividend yield of 5.4%, supported by a resilient balance sheet with S$6.5 billion in cash against S$10.9 billion in total debt [6] - The current upside for SIA appears cyclical rather than structural, with inherent risks including high volatility and normalizing passenger yields [7] Keppel - Keppel has diversified its operations from offshore and marine to infrastructure, energy transition, data centers, and asset management, reaching an all-time high share price of S$12.69 [8] - For FY2025, Keppel's net profit surged 39% YoY to S$1.1 billion, with group revenue increasing by 3.4% YoY to nearly S$6 billion, despite a 16.1% drop in profit attributable to shareholders due to an accounting loss from M1's telco business [9] - As of December 31, 2025, Keppel improved its net gearing to 0.82x, with S$2.3 billion in cash against S$11.3 billion in debt, and proposed a 38% YoY increase in total distribution to S$0.47 per share [10] - Keppel aims to scale funds under management to S$100 billion by end-2026 and S$200 billion by 2030, supported by a deal flow pipeline of about S$33 billion [11] Singapore Technologies Engineering - ST Engineering shares reached a historic peak of S$10.20, driven by a diversified global footprint and a record-high order book of S$32.6 billion as of September 30, 2025 [12] - Nine-month revenue for FY2025 grew 9% YoY to S$9.1 billion, with strong growth across all segments, particularly in Commercial Aerospace and Defence & Public Security [13] - ST Engineering has a consistent dividend policy, declaring a total ordinary dividend of S$0.18 per share for FY2025, along with a proposed special dividend of S$0.05 per share [14] Comparative Analysis - Singapore Airlines offers strong cyclical earnings potential but is closely tied to industry cycles and fuel price volatility [15] - Keppel is positioned for long-term structural growth through its asset-light model, appealing to investors seeking transformational growth [15] - ST Engineering provides stability with predictable recurring revenues, making it a primary choice for dependable dividends and income security [16]