OREANDA-NEWS. The Straits Times Index (STI) is made up of 30 blue chip stocks that account for more than half of the market capitalisation of Singapore’s stock market. Completing the STI Reserve list are UOL Group, Yangzijiang Shipbuilding Holdings, CapitaLand Commercial Trust, Suntec REIT, and Genting Hong Kong. These stocks have a combine market capitalisation of S$22.4 billion.

Reserve List & Index Reviews

The relevance of the STI Reserve List has increased this year ahead of the upcoming strengthening of liquidity rules for STI constituents. On 29 May, FTSE Russell announced that it will strengthen the liquidity rule for the STI, and make a number of changes to the FTSE ST Index Series. The new STI liquidity rule and FTSE ST Index Series methodology change will be implemented in the September 2015 review, after the close of markets on the third Friday, which this year will be 18 September.

To be eligible for inclusion in the STI, companies have to meet a minimum liquidity threshold. The new STI liquidity rule will essentially double the current threshold, ensuring Singapore’s largest blue-chip stocks meet a more stringent liquidity standard before being included into the STI. If an existing constituent is removed from the STI for not meeting an index criteria, the new index entrant could potentially be from the STI Reserve List, which comprises of the five highest ranking non-constituents.  It is important to note, however, that this is not a given as the STI Reserve List was established in the last quarterly index review; all companies will be ranked again in the September 2015 review.

Recent Performance

These five current STI Reserve List stocks maintain an average dividend yield of 4.2%. Over the past 12 months, the five stocks have averaged a 2.1% gain following much stronger performances in the previous two years. Over the past three years the average total retuns for the five stocks was 29.5%. These stocks are tabled below and please note that clicking on a stock name will take you to its relevant page on StockFacts.

Source: SGX StockFacts (Data as of 5 August 2015) – please note performance of Genting Hong Kong is in USD

Source: SGX StockFacts (Data as of 5 August 2015), note six month VWAP as of 5 August 2015

UOL Group

In 1963 a company known as Faber Union was incorporated as a subsidiary of Faber Union (HK). In 1975 it changed its name to United Overseas Land after United Overseas Bank acquired a controlling interest in the Company in mid-1973. In 2006, United Overseas Land was renamed UOL Group.

Back in the 1970s and 1980s, United Overseas Land notes on its online history page that is was known for its prestigious landed developments such as Faber Gardens, FaberHills, Thomson Hills, White House Park, Watten Hills, and Mount Echo Park. The high-rise condominiums included Cairnhill Plaza and Orchard Bel-Air, both in the prime Orchard precinct. The company’s first hotel, Plaza hotel was established in 1971 and its second hotel, New Park Hotel, was acquired in 1989.

Today, the Group’s diversified portfolio comprises residential apartments, offices, retail malls, hotels, spas, and restaurants. Together with hotel subsidiary, Pan Pacific Hotels Group Limited, UOL Group owns and/or manages over 30 hotels, resorts and serviced suites in Asia, Oceania, and North America under two acclaimed brands: “Pan Pacific” and PARKROYAL.

According to SGX StockFacts, shares in UOL Group trade at a Price/Earnings ratio of 8.2 with Price/Book Value of 0.7 and a dividend yield of 2.3%.

Yangzijiang Shipbuilding Holdings

Yangzijiang Shipbuilding Group is a large corporate group, with shipbuilding and offshore engineering as its core business and with four additional sections: financial investment, metal trading, real estate and shipping combined ship-leasing as supplementary business.

According to its website, the Group history can be traced back to 1965, initially a combined ship- repairing and shipbuilding company. After listing on SGX in 2007, the Group become the first Chinese shipbuilding company to list in Singapore.

Yangzijiang Shipbuilding Group produces a range of commercial vessels, such as containerships, bulk carriers, and LNG vessels; and undertakes offshore engineering projects. The company also engages in the building, repair, maintenance, and dismantling of vessels; production and processing of steel structures and belt transportation machinery; gas cylinder filling and seamless gas cylinder inspection; and manufacture of ship accessories. In addition, it provides technical consultancy services and after sales services; sells self-manufactured products; imports and exports various merchandise and technologies; facilitates the sale and export of ships for the ship builder; and trades ship related equipment.

Furthermore, Yangzijiang Shipbuilding Group provides production area for ship manufacturing, maintenance, and breaking; microcredit to enterprises and individuals; manufacture base to construct big vessel components and accessories, as well as designs, manufactures, and repairs marine equipment in addition to other related services.

According to SGX StockFacts, shares in Yangzijiang Shipbuilding trade at a Price/Earnings ratio of 7.1 with Price/Book Value of 1.1 and a dividend yield of 4.4%.  

Capitaland Commercial Trust

CapitaCommercial Trust, a unit trust, invests in real estate and real estate-related assets, which are primarily used for commercial purposes in Singapore. Its portfolio primarily consists of office buildings and transport facilities. The REIT was listed on SGX in May 2004 and is the largest commercial REIT by market capitalisation listed on SGX.

According to its website, CapitaCommercial Trusts portfolio include:

  •   Capital Tower, a Grade A office tower
  •   Six Battery Road, a Grade A office tower
  •   One George Street, a Grade A office tower
  •   Raffles City (60% interest via the RCS Trust), a mixed-use development with an office tower, a shopping mall and two hotels and a convention centre
  •   CapitaGreen (40% interest in development via the MSO Trust), a Grade A office tower obtained Temporary Occupation Permit on 18 December 2014
  •   Twenty Anson, a prime office building
  •   HSBC Building, a prime office building on lease back to HSBC
  •   Wilkie Edge, a mixed use development with office and ancillary retail units
  •   Bugis Village, shop houses for office and retail use
  •   Golden Shoe Car Park, a car park with over 1,000 lots and retail shops on the ground floor

According to SGX StockFacts, units in Capitaland Commercial Trust trade at a Price/Earnings ratio of 10.8 with Price/Book Value of 0.8 and a dividend yield of 5.9%.

Suntec REIT

Suntec REIT was formed in November 2004, and is a REIT launched and managed by the ARA Trust Management (Suntec) Limited. The fund invests in real estate and real estate-related assets that are primarily used for retail or office purposes.

According to its website, Suntec REIT’s portfolio comprises of:

  •   Commercial properties in Suntec City
  •   Park Mall
  •   One-third interest in One Raffles Quay,
  •   One-third interest in Marina Bay Financial Centre Towers 1 and 2 and the Marina Bay Link Mall.
  •   A 60.8% interest in Suntec Singapore Convention & Exhibition Centre
  •   100.0% interest in a commercial building located at 177 Pacific Highway, North Sydney Australia.

Suntec REIT’s office portfolio leases are diversified across 14 business sectors. According to SGX StockFacts, units in Suntec REIT trade at a Price/Earnings ratio of 13.3 with Price/Book Value of 0.8, and a dividend yield of 5.7%.

Genting Hong Kong

Genting Hong Kong was founded in 1993 and formerly known as Star Cruises Limited up until 2010. The company is an investment holding company that is involved in cruise and cruises related operations, leisure, entertainment, and hospitality activities worldwide.

Genting Hong Kong operates a fleet of 28 ships in approximately 450 destinations; the company is headquartered in Hong Kong, but has a presence in more than 20 locations worldwide with offices and representations in Australia, China, India, Indonesia, Japan, Malaysia, the Philippines, Singapore Sweden, Taiwan, Thailand, the United Kingdom, and the United States.

According to SGX StockFacts, shares in Genting Hong Kong trade at a Price/Earnings ratio of 7.7 with Price/Book Value of 0.9, and a dividend yield of 2.8%.