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.

Equity Bottom-Up

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<li>
SGX lists more than 20 transport-related stocks, which include companies that provide air, road, rail and sea transport, as well as businesses that supply ancillary services to these transport operators. 
	 </li>
	<li>
There are 12 transport-linked stocks on SGX with a market cap above S$100 million. These players provide logistics, shipping, subway, bus, taxi as well as air transportation, and also include companies that offer support services to the airline industry. 
	 </li>
	<li>In the YTD, the five best-performing transport-linked plays with market cap above S$100 million were: Penguin Intl (+128.1%), SBS Transit (+56.5%), First Ship Lease Trust (+26.7%), SIA Engineering (+19.3%), and ComfortDelGro Corp (+17.3%). These five have averaged a total return of 49.6% in the YTD.</li>
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SGX lists more than 20 transport-related stocks, which include companies that provide air, road, rail and sea transport, as well as businesses that supply ancillary services to these transport operators. 
 

There are 12 transport-linked plays on SGX with a market capitalisation above S$100 million. These operators provide logistics, shipping, subway, bus, taxi as well as air transportation, and also include companies – like SIA Engineering and SATS – that offer support services to the airline industry. 
 

Most of these 12 operators – which have a combined market cap of about S$32 billion – are highly diversified in terms of the scope of their businesses, as well as their geographical exposure, deriving revenues from across the Asia Pacific region. Six of them are in the shipping industry, three in the airline and airline services sector, while two provide land transport services, and one is in logistics. Three of them – ComfortDelGro, SATS and Singapore Airlines – are also constituents of the benchmark Straits Times Index (STI). 
 

In the 2019 year-to-date, the five best-performing transport-linked plays with market cap above S$100 million were: Penguin International (+128.1%), SBS Transit (+56.5%), First Ship Lease Trust (+26.7%), SIA Engineering (+19.3%), and ComfortDelGro Corp (+17.3%). These five – comprising four stocks and one business trust – have averaged a total return of 49.6% in the YTD, bringing their three-year and five-year total returns to 39.4% and 26.2% respectively. 
 

The table below details the performances of the 12 transport-linked plays on SGX with market cap above S$100 million, sorted by YTD total return.

<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 3Y (%)
			</td>
			<td>
			Total Return 5Y (%)
			</td>
		</tr>
<tr>
<td>
			PENGUIN INTL
			</td>
			<td>
			BTM
			</td>
			<td>
			145
			</td>
			<td>
			128.1
			</td>
			<td>
			188.8
			</td>
			<td>
			7.9
			</td>
		</tr>
<tr>
<td>
			SBS TRANSIT
			</td>
			<td>
			S61
			</td>
			<td>
			1,278
			</td>
			<td>
			56.5
			</td>
			<td>
			92.0
			</td>
			<td>
			178.9
			</td>
		</tr>
<tr>
<td>
			FIRST SHIP LEASE TRUST
			</td>
			<td>
			D8DU
			</td>
			<td>
			101
			</td>
			<td>
			26.7
			</td>
			<td>
			-66.7
			</td>
			<td>
			-41.8
			</td>
		</tr>
<tr>
<td>
			SIA ENGINEERING
			</td>
			<td>
			S59
			</td>
			<td>
			2,935
			</td>
			<td>
			19.3
			</td>
			<td>
			-18.9
			</td>
			<td>
			-30.0
			</td>
		</tr>
<tr>
<td>
			COMFORTDELGRO CORP
			</td>
			<td>
			C52
			</td>
			<td>
			5,263
			</td>
			<td>
			17.3
			</td>
			<td>
			2.0
			</td>
			<td>
			16.1
			</td>
		</tr>
<tr>
<td>
			SATS LTD
			</td>
			<td>
			S58
			</td>
			<td>
			5,524
			</td>
			<td>
			8.8
			</td>
			<td>
			14.6
			</td>
			<td>
			95.9
			</td>
		</tr>
<tr>
<td>
			SINGAPORE POST
			</td>
			<td>
			S08
			</td>
			<td>
			2,115
			</td>
			<td>
			7.1
			</td>
			<td>
			-32.3
			</td>
			<td>
			-40.6
			</td>
		</tr>
<tr>
<td>
			SINGAPORE SHIPPING CORP
			</td>
			<td>
			S19
			</td>
			<td>
			122
			</td>
			<td>
			3.4
			</td>
			<td>
			25.9
			</td>
			<td>
			37.3
			</td>
		</tr>
<tr>
<td>
			SINGAPORE AIRLINES
			</td>
			<td>
			C6L
			</td>
			<td>
			10,797
			</td>
			<td>
			-0.9
			</td>
			<td>
			-1.9
			</td>
			<td>
			9.7
			</td>
		</tr>
<tr>
<td>
			PAN OCEAN CO
			</td>
			<td>
			AZY
			</td>
			<td>
			2,828
			</td>
			<td>
			-9.1
			</td>
			<td>
			20.2
			</td>
			<td>
			-8.0
			</td>
		</tr>
<tr>
<td>
			COSCO SHIPPING INTL
			</td>
			<td>
			F83
			</td>
			<td>
			627
			</td>
			<td>
			-13.6
			</td>
			<td>
			7.5
			</td>
			<td>
			-50.9
			</td>
		</tr>
<tr>
<td>
			PACC OFFSHORE SERVICES
			</td>
			<td>
			U6C
			</td>
			<td>
			181
			</td>
			<td>
			-44.1
			</td>
			<td>
			-68.6
			</td>
			<td>
			-85.0
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			16.6
			</td>
			<td>
			13.6
			</td>
			<td>
			7.4
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 23 Oct 2019)

 

Hike in Bus and Train Fares

Earlier this month, Singapore’s Public Transport Council (PTC) said it would <a href="https://www.ptc.gov.sg/newsroom/news-releases/newsroom-view/2019-fare-review-exercise">raise bus and train fares</a> by 7% from 28 December 2019, the maximum allowable increase under this year’s fare review exercise. The council attributed the hike to higher costs of running the public transport system, largely due to a worldwide rise in energy prices as well as staff wages.  
 

This will translate into an increase of 9 Singapore cents per journey for adult commuters using travel cards, which make up about 65% of all public transport trips in the city-state. The hike also translates into a S$132.5 million annual revenue increase for Public Transport Operators, with SBS Transit Rail and SMRT Trains seeing additional revenues of about S$18.8 million and S$40.2 million respectively. SBS Transit – which is approximately 75%-owned by ComfortDelGro – operates Singapore’s North East MRT Line and Downtown Line. 
 

According to <a href="https://www.dbs.com.sg/treasures/aics/pdfController.page?pdfpath=/content/article/pdf/AIO/102019/191008_insights_singapore_land_transport.pdf">DBS Research</a>, positive effects of the fare hike will accrue only to rail operators SBS Transit Rail and SMRT Trains, as bus revenues fall under the government’s Bus Contracting Model and public bus transport operators do not undertake fare revenue risks.
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SGX lists more than 20 transport-related stocks, which include companies that provide air, road, rail and sea transport, as well as businesses that supply ancillary services to these transport operators. 
	 
	
There are 12 transport-linked stocks on SGX with a market cap above S$100 million. These players provide logistics, shipping, subway, bus, taxi as well as air transportation, and also include companies that offer support services to the airline industry.  
	 
	In the YTD, the five best-performing transport-linked plays with market cap above S$100 million were: Penguin Intl (+128.1%), SBS Transit (+56.5%), First Ship Lease Trust (+26.7%), SIA Engineering (+19.3%), and ComfortDelGro Corp (+17.3%). These five have averaged a total return of 49.6% in the YTD.

 

SGX lists more than 20 transport-related stocks, which include companies that provide air, road, rail and sea transport, as well as businesses that supply ancillary services to these transport operators. 
 

There are 12 transport-linked plays on SGX with a market capitalisation above S$100 million. These operators provide logistics, shipping, subway, bus, taxi as well as air transportation, and also include companies – like SIA Engineering and SATS – that offer support services to the airline industry. 
 

Most of these 12 operators – which have a combined market cap of about S$32 billion – are highly diversified in terms of the scope of their businesses, as well as their geographical exposure, deriving revenues from across the Asia Pacific region. Six of them are in the shipping industry, three in the airline and airline services sector, while two provide land transport services, and one is in logistics. Three of them – ComfortDelGro, SATS and Singapore Airlines – are also constituents of the benchmark Straits Times Index (STI). 
 

In the 2019 year-to-date, the five best-performing transport-linked plays with market cap above S$100 million were: Penguin International (+128.1%), SBS Transit (+56.5%), First Ship Lease Trust (+26.7%), SIA Engineering (+19.3%), and ComfortDelGro Corp (+17.3%). These five – comprising four stocks and one business trust – have averaged a total return of 49.6% in the YTD, bringing their three-year and five-year total returns to 39.4% and 26.2% respectively. 
 

The table below details the performances of the 12 transport-linked plays on SGX with market cap above S$100 million, sorted by YTD total return.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return YTD (%)
			
			
			Total Return 3Y (%)
			
			
			Total Return 5Y (%)
			
		


			PENGUIN INTL
			
			
			BTM
			
			
			145
			
			
			128.1
			
			
			188.8
			
			
			7.9
			
		


			SBS TRANSIT
			
			
			S61
			
			
			1,278
			
			
			56.5
			
			
			92.0
			
			
			178.9
			
		


			FIRST SHIP LEASE TRUST
			
			
			D8DU
			
			
			101
			
			
			26.7
			
			
			-66.7
			
			
			-41.8
			
		


			SIA ENGINEERING
			
			
			S59
			
			
			2,935
			
			
			19.3
			
			
			-18.9
			
			
			-30.0
			
		


			COMFORTDELGRO CORP
			
			
			C52
			
			
			5,263
			
			
			17.3
			
			
			2.0
			
			
			16.1
			
		


			SATS LTD
			
			
			S58
			
			
			5,524
			
			
			8.8
			
			
			14.6
			
			
			95.9
			
		


			SINGAPORE POST
			
			
			S08
			
			
			2,115
			
			
			7.1
			
			
			-32.3
			
			
			-40.6
			
		


			SINGAPORE SHIPPING CORP
			
			
			S19
			
			
			122
			
			
			3.4
			
			
			25.9
			
			
			37.3
			
		


			SINGAPORE AIRLINES
			
			
			C6L
			
			
			10,797
			
			
			-0.9
			
			
			-1.9
			
			
			9.7
			
		


			PAN OCEAN CO
			
			
			AZY
			
			
			2,828
			
			
			-9.1
			
			
			20.2
			
			
			-8.0
			
		


			COSCO SHIPPING INTL
			
			
			F83
			
			
			627
			
			
			-13.6
			
			
			7.5
			
			
			-50.9
			
		


			PACC OFFSHORE SERVICES
			
			
			U6C
			
			
			181
			
			
			-44.1
			
			
			-68.6
			
			
			-85.0
			
		


			Average
			
			
			 
			
			
			 
			
			
			16.6
			
			
			13.6
			
			
			7.4
			
		

Source: Bloomberg &amp; StockFacts (data as of 23 Oct 2019)

 

Hike in Bus and Train Fares

Earlier this month, Singapore’s Public Transport Council (PTC) said it would raise bus and train fares by 7% from 28 December 2019, the maximum allowable increase under this year’s fare review exercise. The council attributed the hike to higher costs of running the public transport system, largely due to a worldwide rise in energy prices as well as staff wages.  
 

This will translate into an increase of 9 Singapore cents per journey for adult commuters using travel cards, which make up about 65% of all public transport trips in the city-state. The hike also translates into a S$132.5 million annual revenue increase for Public Transport Operators, with SBS Transit Rail and SMRT Trains seeing additional revenues of about S$18.8 million and S$40.2 million respectively. SBS Transit – which is approximately 75%-owned by ComfortDelGro – operates Singapore’s North East MRT Line and Downtown Line. 
 

According to DBS Research, positive effects of the fare hike will accrue only to rail operators SBS Transit Rail and SMRT Trains, as bus revenues fall under the government’s Bus Contracting Model and public bus transport operators do not undertake fare revenue risks.



Five Best-Performing Transport-Linked Plays Returned 50% in YTD      

Singapore

First Ship Lease Trust is a shipowner and a provider of leasing services on a long-term bareboat charter basis to the international shipping industry. The Trust has a diversified portfolio of modern and high-quality vessels, comprising of containerships, product tankers, chemical tankers and crude oil tankers.

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First Ship Lease Trust (FSLT SP)

Five Best-Performing Transport-Linked Plays Returned 50% in YTD

SGX lists more than 20 transport-related stocks, which include companies that provide air, road, rail and sea transport, as well as businesses...

Singapore Exchange Ltd (SGX)

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