OREANDA-NEWS. February 03, 2016. Commercial services, support and supplies, in addition to research and consulting services and human capital management are business activities that fall within the Industrials Sector.  Such stocks are referred to as Commercial and Professional Services, and together with Capital Goods and Transportation plays, complete the comparatively large Industrials Sector.

Alongside Financial Services, Consumer Services, Oilfield Services and Technology Services, Industrial Commercial and Professional Services can maintain an important economic role. As noted by the Singapore Economic Development Board (EDB), Singapore’s cosmopolitan talent pool, diversified business landscape and trusted legal and political framework make it a great base for professional services firms to create innovative solutions for future business needs. Furthermore, the EDB maintain that the non-uniformity of commercial systems and regulations in Asia has foretold a growing need for business solutions attuned to Asia’s needs the need to stay ahead of demand, and Singapore has been taking proactive steps to anchor thought and practice leaders in the professional services industry.

Singapore Exchange (SGX) lists more than 30 Industrial Commercial and Professional Services stocks with nine of these stocks maintaining a market capitalisation of more than S\\$100 million. In Indonesia, Malaysia and Thailand there are 10 stocks within the Commercial and Professional Services Segment with a market capitalisation above S\\$100 billion. The nine Singapore stocks have maintained past performances in addition to valuations that have led the region over the past three years.

As illustrated in the charts below, Singapore’s biggest stocks of the Industrial Commercial & Professional Services segment averaged a higher earnings per share growth and total returns than the same sized stocks in Indonesia, Malaysia and Thailand over the past three years. The stocks have also averaged higher price-to-earnings ratios and price-to-book ratios over the past three years.

Commercial & Professional Services Stocks with Market Capitalisation above S\\$100M

Source: SGX & Bloomberg (data as of 29 January 2016), note Median P/B used due to skew in average from outlier.

Please note that the stocks categorised by GICS ® to the Industrials Commercial and Professional Services Subsector can overlap with other key sectors – for instance Riverstone Holdings is also considered a healthcare play due to specialisation in the production of cleanroom gloves and finger cots while Halcyon Agri Group can be considered a consumer play due to its focus on originating, producing  and distributing natural rubber.

As detailed in the table below, the nine largest stocks in the sector have averaged a total return decline of 1.1% in the month of January, bringing their average three-year total returns to 243.5%. These stocks maintained an average price-to-earnings (P/E) ratio of 17.4.

Source: SGX, Bloomberg & SGX StockFacts (data as of 29 January 2016)

*for details on a recent Sale & Purchase Agreement, unconditional mandatory cash offer and establishment of the independent board committee please click here, with recent update here.

Beyond these nine stocks with market capitalisation above S\\$100 million, the 30 largest stocks in the Commercial and Professional Services segment have averaged a negative 6.4% total return in January, which brought their average three-year total return to 82.9%.

The most recent addition to the segment is GS Holdings which listed on 18 January and closed 1 February at 25.5 cents, 0.5 cents above the Initial Public Offering price. GS Holdings provides commercial dishware washing services in Singapore. It offers dishware washing and cleaning related services, such as on-site cleaning and stewarding services; centralised dishware washing services; and cleaning and dishware washing consultancy services, as well as sells dishware washing related equipment and consumables. The company provides its services to food courts, coffee shops, restaurants, hawker centers, F&B tenants located in shopping malls. Other additions to the sector over the past three years include Axcelasia Inc, Zico Holdings, Versalink Holdings and Halcyon Agri Corp.

The table below details the 30 largest stocks of the Commercial and Professional Services segment and is sorted according to market capitalisation. Click on each stock to visit its profile page on SGX StockFacts.