OREANDA-NEWS. This week, business returns are again in focus, with quarterly, semi-annual, and in some cases, full Financial Year (FY) reports being released across the globe over the coming few weeks. Singapore’s biggest stocks of the Consumer Staples sector are expected to begin reporting in the second week of February.

Prior to the upcoming quarterly reports, business returns of Singapore’s big Consumer Staple plays have been amongst the strongest of the sector across developed Asia. Through both developed and emerging Asia, there are more than 400 stocks representing the Consumer Staples sector with a market capitalisation above S$1 billion.

In Singapore, the 10 biggest stocks of the Consumer Staples sector have averaged a return on assets (ROA) of 6.8% and return on equity (ROE) of 13.6%. These two variables provide a measure of the returns in the context of shareholdings and assets.  ROA shows how effectively the company is utilising its assets to generate profits, whilst ROE measures the profitability of the company as a percentage of common shareholders’ equity. As illustrated in the chart below, the ROA for Singapore’s biggest Consumer Staple stocks at 8.3% is almost double the developed Asia average at 4.6%. At the same time, the ROE of Singapore’s biggest Consumer Staples stocks at 16.3% is almost two-thirds higher than that of the developed Asia average at 9.9%.

Consumer Staples Stocks with Mkt Cap of >S$1bn

Source: SGX & Bloomberg (Data as of 18 January 2015)

Singapore’s average ROA and ROE  for the biggest Consumer Staple stocks are also significantly higher than their Hong Kong peers. ROA is expressed as a percentage and is calculated by dividing the company’s net income over a specific period by average total assets over the same period. A higher ROA generally indicates the company is able to deliver more earnings with fewer assets. Meanwhile, ROE shows how management is using shareholders’ funds to generate financial returns. Hence, if the ROE of a stock is 10% over the past 12 months, it means that for every dollar of a common share invested in the stock, the financial return came to 10%.

As illustrated above, in comparison, emerging Asia has been associated with generally higher ROA and ROE than the developed financial centres. Hence, it may be of little surprise that Singapore’s biggest consumer stocks are active in emerging Asia.

Singapore’s Biggest Consumer Staple Stocks

The 10 largest stocks of Singapore’s Consumer Staples Sector maintain a combined market capitalisation of $65 billion, which represents 7.5% of the combined market capitalisation of all stocks listed on Singapore Exchange (SGX). These 10 stocks averaged a price decline of 2.3% in the year-to-date and maintain an average dividend yield of 2.5%. The 10 largest Consumer Staples stocks are detailed below and sorted by market capitalisation. Click on each stock to visit its profile page on SGX StockFacts.

Source: SGX, Bloomberg & SGX StockFacts (Data as of 18 January 2015)

As detailed in the table above, four of the 10 Consumer Staple stocks generated gains in the year-to-date – Thai Beverage Public Company,  Dairy Farm International Holdings, Golden Agri-Resources and Petra Foods. As discussed below all four have different business lines while also maintaining operations in Emerging Asia.

Thai Beverage Public Company

Thai Beverage Public Company Limited, together with its subsidiaries, produces and distributes alcoholic and non-alcoholic beverages in Thailand and internationally. The company operates through four segments: Spirits, Beer, Non-Alcoholic Beverages, and Food. It offers beer; spirits, including brown spirits, white spirits, brandy, Chinese herb spirits, and others; gin, vodka, rum, and whisky; and non-alcoholic beverages comprising drinking water, soda water, electrolyte beverages, energy drinks, green tea, ready-to-drink coffee, and fruit flavored drinks. The company also provides chilled and frozen food products; and light construction bricks, fertilizers, animal feed and supplementary animal feed, etc.

Dairy Farm International Holdings

Dairy Farm International Holdings, through its subsidiaries, operates as a food, health and beauty, and home furnishing retailer in Pan-Asia. It operates through four segments: Food, Health and Beauty, Home Furnishings, and Restaurants. It operates supermarkets and hypermarkets under Wellcome, Cold Storage, Jasons MarketPlace, Giant, Hero, Mercato, Oliver’s, ThreeSixty, Lucky, Rustan’s, and Shopwise brand names. The company also operates convenience stores under the 7-Eleven and Starmart brand names; health and beauty stores under the Mannings, Guardian, Rose Pharmacy, and GNC brand names; and home furnishings stores under the IKEA brand name. In addition, it operates restaurants under Maxim’s brand name in Hong Kong, China, and Vietnam. 

Golden Agri-Resources

Golden Agri-Resources operates an a palm oil plantation company with a total planted area of 484,472 hectares as at 30 June 2015. It has integrated operations focused on the production of palm-based edible oil and fat. Golden Agri-Resources’ primary business activities include cultivating and harvesting of oil palm trees; processing of fresh fruit bunch into crude palm oil ("CPO") and palm kernel; merchandising and refining CPO into value-added products such as cooking oil, margarine and shortening. It also has integrated operations in China including a deep-sea port, oilseeds crushing plants, production capabilities for refined edible oil products as well as other food products such as noodles. 

Petra Foods

Petra Foods manufactures, markets, and distributes chocolate confectionery and consumer products. It offers chocolate and sugar confectionery products, such as molded chocolate, dragees, enrobed wafers, and wafers and biscuits. The company is also involved in the marketing and distribution of healthcare and other consumer products, as well as coffeemix products and other convenience beverages. It markets its products through sales agents and distributors in Indonesia, Malaysia, the Philippines, Singapore, Thailand, China, and other countries in Southeast Asia. 

As noted above, the 10 biggest stocks of the Consumer Staples sector are expected to begin reporting in February. Possible reporting dates are tabled below.

Source: SGX, Bloomberg & SGX StockFacts (Data as of 18 January 2015)

Traditionally, stocks of the Consumer Staples sector have been associated with essential economic products that most people require – such as food, beverage, tobacco and household items. Now, representative stocks can include businesses involved in various stages of foodstuff and/or beverage development – from plantations to consumer distribution. According the Global Industry Classification Standard (GICS®), consumer staples can be broken down into three sub-industry groups, namely food & staples retailing, food, beverage & tobacco and household & personal products.

To access the profiles of all stocks that make up the Consumer Staples sector in SGX StockFacts, investors can select the following industries in the search criteria: