IT is 2020 and Singapore has 6.5 million people within its shores.
Or at least, that's what DBS Vickers Securities predicts for the non-so-distant future.
And with that, the brokerage has highlighted the stocks that could benefit if the population reaches that size about a decade later. Among the winners are the transport providers, property and healthcare players, it said in a recent report. The report comes as Singapore's population hit a record of 4.99 million as of June this year, despite the economic recession, thanks to a spurt in foreigners and non-residents. This influx translates to one non-resident out of every four persons, compared with one in five in 2006, said DBS Vickers.
'This increase in non-resident population, which has been positive in each of the past three years, is significant because in the previous dot-com and SARS downturns, Singapore saw negative non-resident population growth for two years in a row in 2002 and 2003,' said DBS Vickers.
'So even as the better part of the past year was spent navigating a deep economic downturn, non-residents have not departed our shores, but have instead increased in number.'
With the expected jump in population within 10 years, DBS Vickers is expecting rail ridership to surge three-fold to 4.8 million daily rides by 2020, even as SMRT Corporation develops more rail lines.
'We see rail being the preferred choice of public transport,' said the brokerage, which had a 'buy' rating on SMRT and a target price of $2.08.
SMRT offers stable earnings as its electricity contract has been locked in until September 2010 on the back of sustained ridership growth, and has a dividend yield exceeding 4.7 per cent, DBS Vickers noted.
'We also see SMRT benefiting from increased retail space at its stations and interchanges at over 6,100 square metres over the next two years,' it added.
DBS Vickers also sees some short-term catalyst for the stock of ComfortDelGro Corporation, which is likely to clinch the downtown line project.
While there are concerns that its bus operations could be hit by stronger crude oil price and higher quality of service imposed by the authorities, these are expected to be offset by its diversification in other geographical areas.
Its third stock pick among the transport players is Singapore Airport Terminal Services, which could benefit from higher passenger traffic coming through the airport and offers an attractive dividend yield of about 6 per cent.
Property players are also expected to gain from a population boost, as DBS Vickers expects an 82 per cent leap in private housing units over the next 20 years, or an annual net increase of 9,800 private apartments until 2030.
DBS Vickers recommends Fraser & Neave for its 'consistent track record' in developing private properties in the mass and mid-market, noting that in the latest fiscal year, its property unit has sold 1,800 units - the highest among all developers in Singapore - creating stable profits in the next year.
Other recommendations include mass-market and mid-tier developer Allgreen Properties and Bukit Sembawang Estate.
The latter holds the second-largest land bank among the listed developers, though DBS Vickers cautioned that the stock is more suited for long-term investors as it expects a gradual monetisation of its land.
Retail landlords such as Frasers Centrepoint Trust and Suntec Real Estate Investment Trust also stand to benefit from higher pedestrian flows, said DBS Vickers.
As for healthcare, the sector is expected to need an additional three to four hospitals to treat non-chronic diseases or ailments. The industry is also set to meet demands from an aging population.
'We project that hospital admissions could grow by 31 per cent to 570,000 admissions per year as the population reaches 6.5 million,' said the brokerage.
While DBS Vickers is optimistic of the potential for Parkway Holdings with a burgeoning and an aging population, it has put a 'hold' rating on the stock as such positives have already been priced in.