SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

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Utilities was the second-best performing sector on SGX in Feb, with a total return of 7.4%, after IT sector’s 14.5% total return. Utilities also saw net inflows of S$1.5 million from institutional investors, the second straight month of net inflows after S$7.0 million in Jan. 
	 </li>
	<li>
SGX lists 10 stocks that provide infrastructure for water, wastewater treatment and supply services, and they have a combined market capitalisation of nearly S$10 billion. 
	 </li>
	<li>In the 2019 YTD, the three largest capitalised, best-performing water plays were: SIIC Environment (+34.5%), CITIC Envirotech (+18.4%), and China Everbright Water (+18.3%). The trio, which are focused on China’s water sector, averaged a total return of +23.8% in the YTD.</li>
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Second-Best Performer in Feb

Utility stocks maintain infrastructure that supply water, electricity, gas and waste removal services, with population growth the underlying driver of demand for these services.

For the month of February, Utilities was the second-best performing sector on SGX with a total return of 7.4%, after Information Technology’s 14.5% total return. Utilities also saw net inflows of S$1.5 million from institutional investors in February, the second straight month of net inflows after S$7.0 million in January.
<figure>
 <img src="https://api2.sgx.com/sites/default/files/2019-03/Water%20utilities.PNG" alt="Water Utilities Stock">
 </figure>
 <div class="content-caption">Water Utilities Stock</div>
Water Infrastructure Plays on SGX

SGX lists 10 stocks that provide infrastructure for water as well as wastewater treatment and supply services, and they have a combined market capitalisation of nearly S$10 billion. Among the 10, the five largest capitalised water infrastructure plays are: Sembcorp Industries, Keppel Infrastructure Trust, CITIC Envirotech, SIIC Environment and China Everbright Water.

In the 2019 year-to-date, the three largest capitalised, best-performing water stocks were: SIIC Environment (+34.5%), CITIC Envirotech (+18.4%), and China Everbright Water (+18.3%). The trio averaged a total return of +23.8% in the YTD, bringing their one-year and three-year total returns to -26.8% and -34.7% respectively. They also average a dividend yield of 3.3%.

These three stocks focus on China’s water sector, and specialise in environmental water services that include building and managing water and wastewater treatment plants, water supply and recycling, seawater desalination, sludge treatment, as well as development of other water technologies.

The table below details the 10 water infrastructure plays listed on SGX, sorted by market capitalisation.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y (%)
			</td>
			<td>
			Total Return 3Y (%)
			</td>
			<td>
			Div Yld (%)
			</td>
			<td>
			ROE (%)
			</td>
		</tr>
<tr>
<td>
			SEMBCORP INDUSTRIES
			</td>
			<td>
			U96
			</td>
			<td>
			45,678
			</td>
			<td>
			0.8
			</td>
			<td>
			-15.2
			</td>
			<td>
			-9.3
			</td>
			<td>
			1.6
			</td>
			<td>
			4.1
			</td>
		</tr>
<tr>
<td>
			KEPPEL INFRASTRUCTURE TRUST
			</td>
			<td>
			A7RU
			</td>
			<td>
			1,929
			</td>
			<td>
			5.0
			</td>
			<td>
			-5.7
			</td>
			<td>
			27.6
			</td>
			<td>
			7.4
			</td>
			<td>
			-0.2
			</td>
		</tr>
<tr>
<td>
			CITIC ENVIROTECH
			</td>
			<td>
			CEE
			</td>
			<td>
			1,090
			</td>
			<td>
			18.4
			</td>
			<td>
			-34.3
			</td>
			<td>
			-32.7
			</td>
			<td>
			1.7
			</td>
			<td>
			7.0
			</td>
		</tr>
<tr>
<td>
			SIIC ENVIRONMENT
			</td>
			<td>
			BHK
			</td>
			<td>
			964
			</td>
			<td>
			34.5
			</td>
			<td>
			-28.7
			</td>
			<td>
			-43.7
			</td>
			<td>
			5.4
			</td>
			<td>
			6.5
			</td>
		</tr>
<tr>
<td>
			CHINA EVERBRIGHT WATER
			</td>
			<td>
			U9E
			</td>
			<td>
			950
			</td>
			<td>
			18.3
			</td>
			<td>
			-17.3
			</td>
			<td>
			-27.7
			</td>
			<td>
			2.8
			</td>
			<td>
			8.6
			</td>
		</tr>
<tr>
<td>
			MOYA HOLDINGS
			</td>
			<td>
			5WE
			</td>
			<td>
			307
			</td>
			<td>
			4.3
			</td>
			<td>
			-18.0
			</td>
			<td>
			87.2
			</td>
			<td>
			NA
			</td>
			<td>
			12.9
			</td>
		</tr>
<tr>
<td>
			SANLI ENVIRONMENT
			</td>
			<td>
			1E3
			</td>
			<td>
			52
			</td>
			<td>
			-2.5
			</td>
			<td>
			-26.9
			</td>
			<td>
			NA
			</td>
			<td>
			1.3
			</td>
			<td>
			17.1
			</td>
		</tr>
<tr>
<td>
			CHINA INTERNATIONAL
			</td>
			<td>
			BEH
			</td>
			<td>
			39
			</td>
			<td>
			31.0
			</td>
			<td>
			32.5
			</td>
			<td>
			624.6
			</td>
			<td>
			NA
			</td>
			<td>
			4.5
			</td>
		</tr>
<tr>
<td>
			DARCO WATER TECHNOLOGIES
			</td>
			<td>
			BLR
			</td>
			<td>
			33
			</td>
			<td>
			-30.0
			</td>
			<td>
			-22.2
			</td>
			<td>
			59.1
			</td>
			<td>
			NA
			</td>
			<td>
			-5.0
			</td>
		</tr>
<tr>
<td>
			C&amp;G ENVIRONMENTAL
			</td>
			<td>
			D79
			</td>
			<td>
			15
			</td>
			<td>
			25.0
			</td>
			<td>
			0.0
			</td>
			<td>
			-27.3
			</td>
			<td>
			NA
			</td>
			<td>
			NA
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 11 March 2019)

 

China’s Water Market

With nearly 20% of the world’s population and only about 6% of global freshwater resources, China’s water sector is a high priority for the country’s policy makers. With the government’s push towards environmental protection, demand for wastewater treatment facilities has increased across all sectors. Demand among industrial users has also been strong, due to more stringent environmental regulation and enforcement. In its 13th Five Year Plan, China aims to spend around RMB 559 billion (US$83 billion) – or about 0.75% of its GDP – on its water treatment industry.

According to data from <a href="https://www.researchandmarkets.com/research/6hmnmm/china_wastewater?w=5">Research and Markets</a>, the Chinese wastewater treatment market is forecast to reach US$58.2 billion by 2022, from US$42.1 billion in 2017, reflecting a compound annual growth rate (CAGR) of 6.7% over the period.
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Utilities was the second-best performing sector on SGX in Feb, with a total return of 7.4%, after IT sector’s 14.5% total return. Utilities also saw net inflows of S$1.5 million from institutional investors, the second straight month of net inflows after S$7.0 million in Jan. 
	 
	
SGX lists 10 stocks that provide infrastructure for water, wastewater treatment and supply services, and they have a combined market capitalisation of nearly S$10 billion.  
	 
	In the 2019 YTD, the three largest capitalised, best-performing water plays were: SIIC Environment (+34.5%), CITIC Envirotech (+18.4%), and China Everbright Water (+18.3%). The trio, which are focused on China’s water sector, averaged a total return of +23.8% in the YTD.

Second-Best Performer in Feb

Utility stocks maintain infrastructure that supply water, electricity, gas and waste removal services, with population growth the underlying driver of demand for these services.

For the month of February, Utilities was the second-best performing sector on SGX with a total return of 7.4%, after Information Technology’s 14.5% total return. Utilities also saw net inflows of S$1.5 million from institutional investors in February, the second straight month of net inflows after S$7.0 million in January.

      
    
    Water Utilities Stock
Water Infrastructure Plays on SGX

SGX lists 10 stocks that provide infrastructure for water as well as wastewater treatment and supply services, and they have a combined market capitalisation of nearly S$10 billion. Among the 10, the five largest capitalised water infrastructure plays are: Sembcorp Industries, Keppel Infrastructure Trust, CITIC Envirotech, SIIC Environment and China Everbright Water.

In the 2019 year-to-date, the three largest capitalised, best-performing water stocks were: SIIC Environment (+34.5%), CITIC Envirotech (+18.4%), and China Everbright Water (+18.3%). The trio averaged a total return of +23.8% in the YTD, bringing their one-year and three-year total returns to -26.8% and -34.7% respectively. They also average a dividend yield of 3.3%.

These three stocks focus on China’s water sector, and specialise in environmental water services that include building and managing water and wastewater treatment plants, water supply and recycling, seawater desalination, sludge treatment, as well as development of other water technologies.

The table below details the 10 water infrastructure plays listed on SGX, sorted by market capitalisation.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
			
			Total Return 3Y (%)
			
			
			Div Yld (%)
			
			
			ROE (%)
			
		


			SEMBCORP INDUSTRIES
			
			
			U96
			
			
			45,678
			
			
			0.8
			
			
			-15.2
			
			
			-9.3
			
			
			1.6
			
			
			4.1
			
		


			KEPPEL INFRASTRUCTURE TRUST
			
			
			A7RU
			
			
			1,929
			
			
			5.0
			
			
			-5.7
			
			
			27.6
			
			
			7.4
			
			
			-0.2
			
		


			CITIC ENVIROTECH
			
			
			CEE
			
			
			1,090
			
			
			18.4
			
			
			-34.3
			
			
			-32.7
			
			
			1.7
			
			
			7.0
			
		


			SIIC ENVIRONMENT
			
			
			BHK
			
			
			964
			
			
			34.5
			
			
			-28.7
			
			
			-43.7
			
			
			5.4
			
			
			6.5
			
		


			CHINA EVERBRIGHT WATER
			
			
			U9E
			
			
			950
			
			
			18.3
			
			
			-17.3
			
			
			-27.7
			
			
			2.8
			
			
			8.6
			
		


			MOYA HOLDINGS
			
			
			5WE
			
			
			307
			
			
			4.3
			
			
			-18.0
			
			
			87.2
			
			
			NA
			
			
			12.9
			
		


			SANLI ENVIRONMENT
			
			
			1E3
			
			
			52
			
			
			-2.5
			
			
			-26.9
			
			
			NA
			
			
			1.3
			
			
			17.1
			
		


			CHINA INTERNATIONAL
			
			
			BEH
			
			
			39
			
			
			31.0
			
			
			32.5
			
			
			624.6
			
			
			NA
			
			
			4.5
			
		


			DARCO WATER TECHNOLOGIES
			
			
			BLR
			
			
			33
			
			
			-30.0
			
			
			-22.2
			
			
			59.1
			
			
			NA
			
			
			-5.0
			
		


			C&amp;G ENVIRONMENTAL
			
			
			D79
			
			
			15
			
			
			25.0
			
			
			0.0
			
			
			-27.3
			
			
			NA
			
			
			NA
			
		

Source: Bloomberg &amp; StockFacts (data as of 11 March 2019)

 

China’s Water Market

With nearly 20% of the world’s population and only about 6% of global freshwater resources, China’s water sector is a high priority for the country’s policy makers. With the government’s push towards environmental protection, demand for wastewater treatment facilities has increased across all sectors. Demand among industrial users has also been strong, due to more stringent environmental regulation and enforcement. In its 13th Five Year Plan, China aims to spend around RMB 559 billion (US$83 billion) – or about 0.75% of its GDP – on its water treatment industry.

According to data from Research and Markets, the Chinese wastewater treatment market is forecast to reach US$58.2 billion by 2022, from US$42.1 billion in 2017, reflecting a compound annual growth rate (CAGR) of 6.7% over the period.



SGX’s Three Largest Water Plays Averaged 24% Total Return in YTD

Singapore

C&G Environmental Protection Holdings Ltd. develops and operates waste to energy plants in China. The Company specialises in environmental preservation projects like Municipal Solid Waste (MSW) and sewage treatment.

C&G Environmental Protection Hldgs (CNGI SP)

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SGX’s Three Largest Water Plays Averaged 24% Total Return in YTD

Utilities was the second-best performing sector on SGX in Feb, with a total return of 7.4%, after IT sector’s 14.5% total return. Utilities...

Singapore Exchange Ltd (SGX)