OREANDA-NEWS. December 24, 2015. Industrials represent a mega-sector on most exchanges. While the sector is one of 10, it is approximately one-fifth of Singapore’s most active and biggest stocks. The Industrials sector represents approximately 18% of the Straits Times Index (STI), 26% of the FTSE ST Mid Cap Index, and 19% of the FTSE ST Small Cap Index. Of the 10 most active STI stocks in the first 11 months of 2015, four were Industrials – Noble Group, ComfortDelGro Corporation, Keppel Corporation and Hutchison Port Holdings Trust. Activity is gauged by turnover relative to market capitalisation. These four stocks represent two very different industrial businesses – capital goods and transportation. Both these aspects of the Industrial Sector performed differently in 2015.

Declines in global manufacturing and physical trade in 2015 has coincided with falls in the biggest stocks of the capital goods segment, in addition to the one transport stock that provides marine ports and services. The 10 stocks of Singapore’s capital goods segment with a market capitalisation of more than S\\$1 billion generated an average 19.4% decline in the year thus far, worse than the average 6.3% decline in the first six months of 2015. 

Meanwhile, the 11 stocks of Singapore’s transport segment with a market capitalisation of more than S\\$1 billion generated an average 12.0% in total return in the year thus far. Note this has increased from a 6.6% gain in the first six months of 2015, prior to offers for Neptune Orient Lines and Tiger Airways Holdings. The transport stock that owns interests in world-class, deep-water container port assets – Hutchison Port Holdings Trust – performed more in line with the capital goods segment, declining 13.6% in the year thus far, after falling 3.1% in the first six months of 2015.

The third type of Industrial stock – commercial and professional services – is not captured within the STI. However, it is represented by CITIC Envirotech, which is among the 20 largest capitalised Industrial stocks to be listed on Singapore Exchange (SGX). CITIC Envirotech is an investment holding company that provides environmental engineering services in the People’s Republic of China, the US and Malaysia. The company operates through three segments – Engineering, Treatment, and Membrane.

The 20 largest capitalised Industrials stocks on SGX have a combined market capitalisation of S\\$175.3 billion. In the year thus far, these stocks generated a negative 8.3% total return, which took their three-year return to 18.0%. In comparison, the MSCI Asia ex-Japan Industrials Index generated a negative 3.3% total return in the year-to-date, taking its three-year average return to 6.1%.

Recent Valuations

Price-earnings (P/E) ratios show what share price investors are willing to pay for every dollar the company earns.

The 20 largest Industrial stocks currently trade at an average P/E of 17.3. Of the 20 stocks, the five with the highest P/E ratios were: CITIC Envirotech, United Engineers, SMRT Corporation, SIA Engineering Company and Singapore Airlines. The five with the lowest P/E ratios were: Sembcorp Marine, China Merchants Holdings (Pacific), Sembcorp Industries, Keppel Corporation and Yangzijiang Shipbuilding (Holdings).

Book value is made up of the stock’s tangible assets net of liabilities (such as debt), and expressed as a function of shares outstanding. The price-to-book (P/B) ratio is used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. The 20 stocks average a P/B of 1.7. Of the 20, the five with the highest P/B ratios were: Singapore Technologies Engineering, Singapore Post, SIA Engineering Company, SATS and ComfortDelGro Corporation. The five with the lowest P/E ratios were: Yangzijiang Shipbuilding (Holdings), Hutchison Port Holdings Trust, Jardine Strategic Holdings, United Engineers and Noble Group.

The 20 largest Industrial stocks are tabled below, and are sorted according to market capitalisation. Clicking on a stock name will take you to its relevant page on StockFacts.

Source: SGX, Bloomberg & SGX StockFacts (data as of 21 December 2015)

For more information regarding the Pre-Conditional Voluntary General Offer for Neptune Orient Lines Limited from CMA CGM S.A, please click here

As of yesterday’s close, the 20 stocks were trading at an average 14.0% above their 12-month lows and 25.2% below their 12-month highs. Of the 20, seven stocks saw 12-month lows in the month of December.

Source: SGX, Bloomberg & SGX StockFacts (data as of 21 December 2015)

For more information regarding the Pre-Conditional Voluntary General Offer for Neptune Orient Lines Limited from CMA CGM S.A, please click here