Singapore's Largest Consumer Plays Beat Regional Counterparts in YTD

OREANDA-NEWS. In the 2016 year to date,  Singapore’s 10 largest capitalised consumer plays have averaged stronger returns with higher Return on Equity (ROE) filings than the 10 largest consumer plays of Asia Pacific. Singapore’s 10 largest capitalised consumer plays and the 10 largest consumer plays of Asia Pacific both span six different consumer facing industries.

ROE simply measures profitability of the company given the average outstanding common shareholders’ equity. Singapore’s 10 largest consumer plays maintain an average ROE of 16.3% as of the last filing, compared to an average of 13.9% for the 10 largest consumer plays listed across Asia Pacific. Over the past five years the average ROE for the 10 Singapore stocks was 18.2%, compared to 14.3% for the 10 regional stocks.  

Indicative dividend yields are similar with an average of 2.7% for Singapore’s 10 largest Consumer plays compared to 2.8% for the region’s largest 10.  The individual yields for the Singapore stocks are detailed below.

Source: SGX, Bloomberg & SGX StockFacts (data as of 27 May 2016)

Total returns of the region’s largest capitalised consumer plays have been stronger than Singapore’s largest 10 consumer plays over the past five years with seven of the region’s largest 10 stocks listed in Japan. However, in the year to date, the region’s 10 largest capitalised consumer plays have averaged a decline of 5.2%, while Singapore’s 10 largest consumer plays have averaged a 6.3% total return. Note these total returns are expressed in Singapore dollars and dividend inclusive.

The strongest performers of Singapore’s 10 largest consumer plays have been Thai Beverage PCL, Wilmar International and Golden Agri-Resources.  The respective total returns are detailed in the table below. To see the full profile of a stock in SGX StockFacts, click on the appropriate link.

Source: SGX, Bloomberg & SGX StockFacts (data as of 27 May 2016)

The two consumer sectors, Consumer Discretionary and Consumer Staples, are made up of businesses that supply goods and services to consumers. Consumer Discretionary businesses include both manufacturers and services. The manufacturing side covers cars, household and leisure items in addition to textiles and clothing, while the services side includes hotels, restaurants, media and consumer retailing.  The businesses of the Consumer Staples are more focused on food, beverage and other non-durable products and services. This can include plantations to manufacturers and packagers to food retailers. 

These sector definitions are sourced from GICS® which also maintains that Consumer Discretionary Sector tends to be most sensitive to economic cycles, while the Consumer Staples Sector tends to be less sensitive to economic cycles. A caveat to the former is that just because a Consumer Staples stock provides a staple or necessity product, it does not make the business immune to competing businesses chasing market share.

Across Asia Pacific, there are approximately three primary-listed Consumer Discretionary stocks to every one Consumer Staples stock. However Consumer Staples stocks do tend to average a higher market capitalisation than the Consumer Discretionary side. This means that despite a much lower number of stocks, Asia Pacific’s combined Consumer Staples stocks maintain almost three-fifths of the market capitalisation of the Consumer Discretionary stocks. The combined market capitalisation of the primary listed stocks that make up Asia Pacific’s Consumer Staples Sector is S$2.3 trillion compared to S$3.9 trillion for Asia Pacific’s Consumer Discretionary Sector. Singapore’s FTSE ST Catalist Index exemplifies the difference in the number of Consumer Discretionary Stocks to Consumer Staples Stocks – with a ratio of 27 to 5.