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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<li>
In 1H19, Singapore’s 30 most actively traded manufacturers (non-food) produced 20% average total returns, outpacing STI gains, in a similar style to their below benchmark performance amidst declines in 2018, and above benchmark total returns amidst gains in 2017 and 2016.  
	 </li>
	<li>
1H19 total returns of the 30 stocks were more consistent than recent years, with a median 21% total return, 24 gainers &amp; six decliners, combined net institutional inflows of S$264 million; with Memtech, Jadason &amp; Hi-P Int, the strongest performing of the 30.  
	 </li>
	<li>Together the 30 stocks accounted for more than one-tenth of the day-to-day turnover of the Singapore stock market in 1H19. Manufacturers YZJ, Venture, Sing Tech Eng, AEM &amp; Sembcorp Marine were also amidst Singapore’s 30 most active stocks by turnover for 1H19.  </li>
</ul>
The global economy in the first half of 2019 was mostly characterised by downgrades to the outlook for global economic growth, weakening Purchasing Manufacturing Indices across the globe and trade tensions between the World’s two largest economies returning in early May through to end of June.

However, an outlook of lower interest rates, strength in commodity prices, combined with the fact that the 2019 decelerating growth had begun to be built into market expectations in 2018, saw the majority of Singapore’s 30 most actively traded non-food manufacturing stocks generate positive gains in 1H19.  The average market value of these 30 stocks, measured by their market capitalisation is S$1.2 billion. Hence in many cases these businesses are either multinational corporations or amongst the leaders in their product field. 

These 30 stocks include five companies that are amongst Singapore’s 50 biggest companies by market capitalisation - Singapore Tech Engineering, Yangzijiang Shipbuilding, Venture Corporation, Sembcorp Marine and Haw Par Corp.

Cyclical Nature of Manufacturing

Performance of the manufacturing stocks over the past three and half years is illustrated in the chart below. The mean and median total returns of the 30 manufacturing stocks is provided in addition to the STI total returns. Note while each stock has its own intrinsic drivers – from product cycles to market share, the combined performances of the 30 manufacturing stocks that span multiple sectors and countries can provide for a general inference to past trends and sensitivity to global growth.

When the STI generated positive gains, the manufacturing stocks outpaced those benchmark gains and when the STI generated declines, the manufacturing stocks tended to exacerbate the benchmark’s decline.
<figure>
 <img src="https://api2.sgx.com/sites/default/files/2019-07/Total%20Returns%20of%2030%20Most%20Active%20Manufacturing%20Stocks%20%28%25%29.JPG" alt="Total Returns of 30 Most Active Manufacturing Stocks (%)">
 </figure>
 <div class="content-caption">Total Returns of 30 Most Active Manufacturing Stocks (%)</div>
Recent years has seen some significant swings to the global growth outlook which has decelerated since Singapore was amongst the strongest growing advanced economies across the world in 2017.   

During the period covered in the above chart, the Singapore SIPMM recorded 32 months of consecutive expansion, before registering a 49.9 contraction for Singapore in May. The PMI for June is expected to be released before the market open tomorrow. SIPMM noted in recent releases that anecdotal evidence suggested that manufacturers are increasingly concerned about the escalation of trade tensions between the world’s two largest economies. Any reprieve following the G20 developments over the weekend would expected to be shown in the July PMI to be released in early August. 

Total returns of the 30 stocks in 1H19 were more consistent than recent years, with a median 21.1% total return and average total return of 20.4%. This was a contrast to the skew in 2017 average total returns due to performances from AEM Holdings, Jadason Enterprises and Hi-P International. 

In terms of net institutional inflow, Yangzijiang Shipbuilding and Singapore Tech Engineering ranked as the second and fifth highest recipients amongst all SGX stocks in the 1H19. Combined the 30 stocks saw net institutional inflows of S$264 million over 1H19. The segment also contributed over one-tenth of the day-to-day turnover value of all stocks listed on the SGX.

The 30 non-food manufacturing stocks, sort by highest turnover in  are tabled below.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			1H19 Overall

			Turnover Ranking 
			</td>
			<td>
			1H19 Overall

			Market Cap Ranking 
			</td>
			<td>
			Total Return 1H19 %
			</td>
			<td>
			Total Return 2018 %
			</td>
			<td>
			12M Historical Volatility %
			</td>
		</tr>
<tr>
<td>
			YANGZIJIANG SHIPBUILDING
			</td>
			<td>
			BS6
			</td>
			<td>
			7
			</td>
			<td>
			27
			</td>
			<td>
			27
			</td>
			<td>
			-11.4
			</td>
			<td>
			36
			</td>
		</tr>
<tr>
<td>
			VENTURE CORP
			</td>
			<td>
			V03
			</td>
			<td>
			11
			</td>
			<td>
			34
			</td>
			<td>
			20
			</td>
			<td>
			-29.1
			</td>
			<td>
			41
			</td>
		</tr>
<tr>
<td>
			SINGAPORE TECH ENGINEERING
			</td>
			<td>
			S63
			</td>
			<td>
			19
			</td>
			<td>
			14
			</td>
			<td>
			22
			</td>
			<td>
			11.8
			</td>
			<td>
			19
			</td>
		</tr>
<tr>
<td>
			AEM HOLDINGS
			</td>
			<td>
			AWX
			</td>
			<td>
			27
			</td>
			<td>
			185
			</td>
			<td>
			27
			</td>
			<td>
			1.5
			</td>
			<td>
			67
			</td>
		</tr>
<tr>
<td>
			SEMBCORP MARINE
			</td>
			<td>
			S51
			</td>
			<td>
			30
			</td>
			<td>
			45
			</td>
			<td>
			-2
			</td>
			<td>
			-15.9
			</td>
			<td>
			30
			</td>
		</tr>
<tr>
<td>
			HI-P INTERNATIONAL
			</td>
			<td>
			H17
			</td>
			<td>
			32
			</td>
			<td>
			90
			</td>
			<td>
			62
			</td>
			<td>
			-50.8
			</td>
			<td>
			66
			</td>
		</tr>
<tr>
<td>
			VALUETRONICS HOLDINGS
			</td>
			<td>
			BN2
			</td>
			<td>
			56
			</td>
			<td>
			176
			</td>
			<td>
			4
			</td>
			<td>
			-22.8
			</td>
			<td>
			38
			</td>
		</tr>
<tr>
<td>
			CREATIVE TECHNOLOGY
			</td>
			<td>
			C76
			</td>
			<td>
			71
			</td>
			<td>
			182
			</td>
			<td>
			-2
			</td>
			<td>
			254.2
			</td>
			<td>
			58
			</td>
		</tr>
<tr>
<td>
			SUNPOWER GROUP
			</td>
			<td>
			5GD
			</td>
			<td>
			72
			</td>
			<td>
			158
			</td>
			<td>
			50
			</td>
			<td>
			-27.6
			</td>
			<td>
			67
			</td>
		</tr>
<tr>
<td>
			FRENCKEN GROUP
			</td>
			<td>
			E28
			</td>
			<td>
			86
			</td>
			<td>
			186
			</td>
			<td>
			61
			</td>
			<td>
			-18.9
			</td>
			<td>
			49
			</td>
		</tr>
<tr>
<td>
			HAW PAR CORP
			</td>
			<td>
			H02
			</td>
			<td>
			92
			</td>
			<td>
			46
			</td>
			<td>
			26
			</td>
			<td>
			7.9
			</td>
			<td>
			18
			</td>
		</tr>
<tr>
<td>
			SUNNINGDALE TECH
			</td>
			<td>
			BHQ
			</td>
			<td>
			106
			</td>
			<td>
			191
			</td>
			<td>
			-1
			</td>
			<td>
			-21.9
			</td>
			<td>
			30
			</td>
		</tr>
<tr>
<td>
			FU YU CORP
			</td>
			<td>
			F13
			</td>
			<td>
			117
			</td>
			<td>
			231
			</td>
			<td>
			13
			</td>
			<td>
			10.1
			</td>
			<td>
			28
			</td>
		</tr>
<tr>
<td>
			MEMTECH INTERNATIONAL
			</td>
			<td>
			BOL
			</td>
			<td>
			123
			</td>
			<td>
			211
			</td>
			<td>
			77
			</td>
			<td>
			-23.5
			</td>
			<td>
			49
			</td>
		</tr>
<tr>
<td>
			SARINE TECHNOLOGIES
			</td>
			<td>
			U77
			</td>
			<td>
			133
			</td>
			<td>
			260
			</td>
			<td>
			-29
			</td>
			<td>
			-52.0
			</td>
			<td>
			49
			</td>
		</tr>
<tr>
<td>
			RIVERSTONE HOLDINGS
			</td>
			<td>
			AP4
			</td>
			<td>
			142
			</td>
			<td>
			123
			</td>
			<td>
			-13
			</td>
			<td>
			7.9
			</td>
			<td>
			23
			</td>
		</tr>
<tr>
<td>
			INNOTEK
			</td>
			<td>
			M14
			</td>
			<td>
			161
			</td>
			<td>
			251
			</td>
			<td>
			29
			</td>
			<td>
			18.3
			</td>
			<td>
			40
			</td>
		</tr>
<tr>
<td>
			MANUFACTURING INTEGRATION
			</td>
			<td>
			M11
			</td>
			<td>
			167
			</td>
			<td>
			357
			</td>
			<td>
			19
			</td>
			<td>
			18.1
			</td>
			<td>
			67
			</td>
		</tr>
<tr>
<td>
			CHUAN HUP HOLDINGS
			</td>
			<td>
			C33
			</td>
			<td>
			173
			</td>
			<td>
			192
			</td>
			<td>
			30
			</td>
			<td>
			-3.7
			</td>
			<td>
			42
			</td>
		</tr>
<tr>
<td>
			JEP HOLDINGS
			</td>
			<td>
			1J4
			</td>
			<td>
			174
			</td>
			<td>
			329
			</td>
			<td>
			10
			</td>
			<td>
			-3.6
			</td>
			<td>
			54
			</td>
		</tr>
<tr>
<td>
			HANWELL HOLDINGS
			</td>
			<td>
			DM0
			</td>
			<td>
			193
			</td>
			<td>
			255
			</td>
			<td>
			45
			</td>
			<td>
			-43.6
			</td>
			<td>
			40
			</td>
		</tr>
<tr>
<td>
			MIYOSHI
			</td>
			<td>
			M03
			</td>
			<td>
			195
			</td>
			<td>
			437
			</td>
			<td>
			10
			</td>
			<td>
			-39.6
			</td>
			<td>
			60
			</td>
		</tr>
<tr>
<td>
			AA GROUP HOLDINGS
			</td>
			<td>
			5GZ
			</td>
			<td>
			196
			</td>
			<td>
			485
			</td>
			<td>
			-47
			</td>
			<td>
			-51.3
			</td>
			<td>
			127
			</td>
		</tr>
<tr>
<td>
			AVARGA
			</td>
			<td>
			U09
			</td>
			<td>
			199
			</td>
			<td>
			213
			</td>
			<td>
			23
			</td>
			<td>
			-23.4
			</td>
			<td>
			41
			</td>
		</tr>
<tr>
<td>
			HALCYON AGRI CORP
			</td>
			<td>
			5VJ
			</td>
			<td>
			207
			</td>
			<td>
			118
			</td>
			<td>
			22
			</td>
			<td>
			-29.8
			</td>
			<td>
			41
			</td>
		</tr>
<tr>
<td>
			JADASON ENTERPRISES
			</td>
			<td>
			J03
			</td>
			<td>
			222
			</td>
			<td>
			450
			</td>
			<td>
			75
			</td>
			<td>
			-73.7
			</td>
			<td>
			137
			</td>
		</tr>
<tr>
<td>
			IX BIOPHARMA
			</td>
			<td>
			42C
			</td>
			<td>
			228
			</td>
			<td>
			225
			</td>
			<td>
			43
			</td>
			<td>
			-15.2
			</td>
			<td>
			66
			</td>
		</tr>
<tr>
<td>
			ELEC &amp; ELTEK INT CO
			</td>
			<td>
			E16
			</td>
			<td>
			229
			</td>
			<td>
			170
			</td>
			<td>
			8
			</td>
			<td>
			-11.7
			</td>
			<td>
			34
			</td>
		</tr>
<tr>
<td>
			NAM LEE PRESSED METAL IND
			</td>
			<td>
			G0I
			</td>
			<td>
			232
			</td>
			<td>
			282
			</td>
			<td>
			5
			</td>
			<td>
			1.1
			</td>
			<td>
			25
			</td>
		</tr>
<tr>
<td>
			MICRO-MECHANICS HOLDINGS
			</td>
			<td>
			5DD
			</td>
			<td>
			242
			</td>
			<td>
			200
			</td>
			<td>
			-4
			</td>
			<td>
			-16.2
			</td>
			<td>
			21
			</td>
		</tr>
</tbody></table>
Source: SGX StockFacts, Bloomberg (Data as of 30 June 2019) . Note overall turnover ranking is based on highest 1H19 average daily traded turnover for currently listed stocks.
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In 1H19, Singapore’s 30 most actively traded manufacturers (non-food) produced 20% average total returns, outpacing STI gains, in a similar style to their below benchmark performance amidst declines in 2018, and above benchmark total returns amidst gains in 2017 and 2016.   
	 
	
1H19 total returns of the 30 stocks were more consistent than recent years, with a median 21% total return, 24 gainers &amp; six decliners, combined net institutional inflows of S$264 million; with Memtech, Jadason &amp; Hi-P Int, the strongest performing of the 30.   
	 
	Together the 30 stocks accounted for more than one-tenth of the day-to-day turnover of the Singapore stock market in 1H19. Manufacturers YZJ, Venture, Sing Tech Eng, AEM &amp; Sembcorp Marine were also amidst Singapore’s 30 most active stocks by turnover for 1H19.  

The global economy in the first half of 2019 was mostly characterised by downgrades to the outlook for global economic growth, weakening Purchasing Manufacturing Indices across the globe and trade tensions between the World’s two largest economies returning in early May through to end of June.

However, an outlook of lower interest rates, strength in commodity prices, combined with the fact that the 2019 decelerating growth had begun to be built into market expectations in 2018, saw the majority of Singapore’s 30 most actively traded non-food manufacturing stocks generate positive gains in 1H19.  The average market value of these 30 stocks, measured by their market capitalisation is S$1.2 billion. Hence in many cases these businesses are either multinational corporations or amongst the leaders in their product field. 

These 30 stocks include five companies that are amongst Singapore’s 50 biggest companies by market capitalisation - Singapore Tech Engineering, Yangzijiang Shipbuilding, Venture Corporation, Sembcorp Marine and Haw Par Corp.

Cyclical Nature of Manufacturing

Performance of the manufacturing stocks over the past three and half years is illustrated in the chart below. The mean and median total returns of the 30 manufacturing stocks is provided in addition to the STI total returns. Note while each stock has its own intrinsic drivers – from product cycles to market share, the combined performances of the 30 manufacturing stocks that span multiple sectors and countries can provide for a general inference to past trends and sensitivity to global growth.

When the STI generated positive gains, the manufacturing stocks outpaced those benchmark gains and when the STI generated declines, the manufacturing stocks tended to exacerbate the benchmark’s decline.

      
    
    Total Returns of 30 Most Active Manufacturing Stocks (%)
Recent years has seen some significant swings to the global growth outlook which has decelerated since Singapore was amongst the strongest growing advanced economies across the world in 2017.   

During the period covered in the above chart, the Singapore SIPMM recorded 32 months of consecutive expansion, before registering a 49.9 contraction for Singapore in May. The PMI for June is expected to be released before the market open tomorrow. SIPMM noted in recent releases that anecdotal evidence suggested that manufacturers are increasingly concerned about the escalation of trade tensions between the world’s two largest economies. Any reprieve following the G20 developments over the weekend would expected to be shown in the July PMI to be released in early August. 

Total returns of the 30 stocks in 1H19 were more consistent than recent years, with a median 21.1% total return and average total return of 20.4%. This was a contrast to the skew in 2017 average total returns due to performances from AEM Holdings, Jadason Enterprises and Hi-P International. 

In terms of net institutional inflow, Yangzijiang Shipbuilding and Singapore Tech Engineering ranked as the second and fifth highest recipients amongst all SGX stocks in the 1H19. Combined the 30 stocks saw net institutional inflows of S$264 million over 1H19. The segment also contributed over one-tenth of the day-to-day turnover value of all stocks listed on the SGX.

The 30 non-food manufacturing stocks, sort by highest turnover in  are tabled below.




			Name
			
			
			SGX Code
			
			
			1H19 Overall

			Turnover Ranking 
			
			
			1H19 Overall

			Market Cap Ranking 
			
			
			Total Return 1H19 %
			
			
			Total Return 2018 %
			
			
			12M Historical Volatility %
			
		


			YANGZIJIANG SHIPBUILDING
			
			
			BS6
			
			
			7
			
			
			27
			
			
			27
			
			
			-11.4
			
			
			36
			
		


			VENTURE CORP
			
			
			V03
			
			
			11
			
			
			34
			
			
			20
			
			
			-29.1
			
			
			41
			
		


			SINGAPORE TECH ENGINEERING
			
			
			S63
			
			
			19
			
			
			14
			
			
			22
			
			
			11.8
			
			
			19
			
		


			AEM HOLDINGS
			
			
			AWX
			
			
			27
			
			
			185
			
			
			27
			
			
			1.5
			
			
			67
			
		


			SEMBCORP MARINE
			
			
			S51
			
			
			30
			
			
			45
			
			
			-2
			
			
			-15.9
			
			
			30
			
		


			HI-P INTERNATIONAL
			
			
			H17
			
			
			32
			
			
			90
			
			
			62
			
			
			-50.8
			
			
			66
			
		


			VALUETRONICS HOLDINGS
			
			
			BN2
			
			
			56
			
			
			176
			
			
			4
			
			
			-22.8
			
			
			38
			
		


			CREATIVE TECHNOLOGY
			
			
			C76
			
			
			71
			
			
			182
			
			
			-2
			
			
			254.2
			
			
			58
			
		


			SUNPOWER GROUP
			
			
			5GD
			
			
			72
			
			
			158
			
			
			50
			
			
			-27.6
			
			
			67
			
		


			FRENCKEN GROUP
			
			
			E28
			
			
			86
			
			
			186
			
			
			61
			
			
			-18.9
			
			
			49
			
		


			HAW PAR CORP
			
			
			H02
			
			
			92
			
			
			46
			
			
			26
			
			
			7.9
			
			
			18
			
		


			SUNNINGDALE TECH
			
			
			BHQ
			
			
			106
			
			
			191
			
			
			-1
			
			
			-21.9
			
			
			30
			
		


			FU YU CORP
			
			
			F13
			
			
			117
			
			
			231
			
			
			13
			
			
			10.1
			
			
			28
			
		


			MEMTECH INTERNATIONAL
			
			
			BOL
			
			
			123
			
			
			211
			
			
			77
			
			
			-23.5
			
			
			49
			
		


			SARINE TECHNOLOGIES
			
			
			U77
			
			
			133
			
			
			260
			
			
			-29
			
			
			-52.0
			
			
			49
			
		


			RIVERSTONE HOLDINGS
			
			
			AP4
			
			
			142
			
			
			123
			
			
			-13
			
			
			7.9
			
			
			23
			
		


			INNOTEK
			
			
			M14
			
			
			161
			
			
			251
			
			
			29
			
			
			18.3
			
			
			40
			
		


			MANUFACTURING INTEGRATION
			
			
			M11
			
			
			167
			
			
			357
			
			
			19
			
			
			18.1
			
			
			67
			
		


			CHUAN HUP HOLDINGS
			
			
			C33
			
			
			173
			
			
			192
			
			
			30
			
			
			-3.7
			
			
			42
			
		


			JEP HOLDINGS
			
			
			1J4
			
			
			174
			
			
			329
			
			
			10
			
			
			-3.6
			
			
			54
			
		


			HANWELL HOLDINGS
			
			
			DM0
			
			
			193
			
			
			255
			
			
			45
			
			
			-43.6
			
			
			40
			
		


			MIYOSHI
			
			
			M03
			
			
			195
			
			
			437
			
			
			10
			
			
			-39.6
			
			
			60
			
		


			AA GROUP HOLDINGS
			
			
			5GZ
			
			
			196
			
			
			485
			
			
			-47
			
			
			-51.3
			
			
			127
			
		


			AVARGA
			
			
			U09
			
			
			199
			
			
			213
			
			
			23
			
			
			-23.4
			
			
			41
			
		


			HALCYON AGRI CORP
			
			
			5VJ
			
			
			207
			
			
			118
			
			
			22
			
			
			-29.8
			
			
			41
			
		


			JADASON ENTERPRISES
			
			
			J03
			
			
			222
			
			
			450
			
			
			75
			
			
			-73.7
			
			
			137
			
		


			IX BIOPHARMA
			
			
			42C
			
			
			228
			
			
			225
			
			
			43
			
			
			-15.2
			
			
			66
			
		


			ELEC &amp; ELTEK INT CO
			
			
			E16
			
			
			229
			
			
			170
			
			
			8
			
			
			-11.7
			
			
			34
			
		


			NAM LEE PRESSED METAL IND
			
			
			G0I
			
			
			232
			
			
			282
			
			
			5
			
			
			1.1
			
			
			25
			
		


			MICRO-MECHANICS HOLDINGS
			
			
			5DD
			
			
			242
			
			
			200
			
			
			-4
			
			
			-16.2
			
			
			21
			
		

Source: SGX StockFacts, Bloomberg (Data as of 30 June 2019) . Note overall turnover ranking is based on highest 1H19 average daily traded turnover for currently listed stocks.



Manufacturing Stocks Outpaced Benchmarks with 20% Gains in 1H19





Real Estate, Manufacturing and Food &amp; Beverage stocks made up close to half of Singapore’s top 200 stocks by turnover in the first 5 months of 2019. The stocks representing tech–laden Manufacturing were the best performers in 2019 YTD and preceding two years, with F&amp;B the best performer in 2016. 
	 
	
Distinct drivers of the three sectors included interest rate outlooks and property prices for Real Estate, technological advancements, value chain integration and global trade for Manufacturing while incomes, tastes, preferences and tourism drove Food &amp; Beverage sales.  
	 
	
Real estate stocks showed the most consistency in returns, with the least standard deviation amongst the individual stock performances, followed by food &amp; beverage stocks, with the individual manufacturing stocks showing the most performance deviation in past years.  
	 
	Returns amongst the relevant 23 manufacturing stocks have been more constant in the 2019 YTD, with the 18% average total return generated by  19 gainers and four decliners, and a median total return of 19%. Hi-P Int, Frencken &amp; Sunpower led the manufacturers over the 23 weeks. 

As 2019 rapidly approaches the halftime mark of 30 June, clear drivers of investor sentiment in the year thus far have included concerns of global growth deceleration at home and abroad, resumption of trade frictions amongst the world’s two largest economies in early May, and a more dovish outlook for US interest rates.

In Singapore, the Straits Times index (“STI”) has generated  a total return of 6.8% in the 2019 year-to-date, in-line with the FTSE ASEAN All Share Index which has gained 7.4%. 

Looking beyond the STI, the 200 most actively traded stocks have generated an average total return of 8.0%. This does not include the average total returns of RHT Health Trust, Memtech International and Indofood Agri Resources which averaged 89.2% gains on premium cash offers for these businesses.

60 Real Estate Stocks Amongst Top 200 Stocks by Turnover 

Singapore’s strong property and infrastructure fundamentals have provided beachheads for Singapore’s listed Real Estate Sector. For the first five months of 2019, the 60 Real Estate stocks amongst the 200 most active traded stocks by turnover accounted for the most day-to-day market turnover, which was followed by Financial Services. As discussed recently (click here) this year Singapore REITs have attracted investment flows from global funds which has included private equity funds.

The 23 manufacturing stocks that were amongst the 200 stocks by turnover accounted for the most day-to-day turnover after the 11 financial services stocks. After Real Estate’s 60 stocks, the 23 manufacturing stocks led by the likes of Yangzijiang Shipbuilding, Venture Corporation and Singapore Tech Engineering, contributed the next most number of stocks in the top 200 by turnover. Note these manufacturing stocks do not include Food Manufacturers or Processors, and span diverse business from advanced electronics to healthcare products.

With Food and Beverage (“F&amp;B”) contributing 14 stocks to the top 200 by turnover, and the next highest number of stocks after Manufacturing, the three sectors of Real Estate, Manufacturing and F&amp;B together made up 97 stocks. This was close to half the top 200 stocks by turnover. The average total returns of the three genres of stocks over recent years are illustrated in the chart below. 

      
    
    Total Returns of Three Genres
The average total returns illustrated above were built on various levels of consistency across the performances of each of the Sector’s stocks. For instance, the 60 real estate stocks showed the most consistency, with the least standard deviation amongst the individual stock performances in all four time periods.

This was followed by F&amp;B, which saw more consistency in the performances across its relevant 14 stocks than Manufacturing over the past three years ending 2018. As noted above, Singapore manufacturing stocks span a wide range of industries, with the diversification exponentiated by the geographical reach of these businesses. This was a contributing factor to the individual manufacturing stocks showing the most performance deviation over the preceding three years.  However, in the 2019 year to date, performances across manufacturing stocks have seen marginally less deviation than the F&amp;B stocks. 

The comparative performances of the relevant stocks are tabled below, with each table sorted by stocks with the most turnover over the first five months of 2019.  The 60 real estate stocks maintain a combined market capitalisation of S$175 billion, the 23 manufacturing stocks maintain a total market capitalisation of S$35 billion and the 14 F&amp;B stocks maintain a total market capitalisation of S$60 billion. Note the designated F&amp;B stocks do not include Palm Oil producers.




			Real Estate
			
			
			Stock

			Code
			
			
			2016 TR %
			
			
			2017 TR %
			
			
			TR 2018 %
			
			
			2019 TR to 11 June %
			
		


			ASCENDAS REAL ESTATE INV TRT
			
			
			A17U
			
			
			4.6
			
			
			27.4
			
			
			0.3
			
			
			18.7
			
		


			CAPITALAND
			
			
			C31
			
			
			-7.2
			
			
			20.1
			
			
			-9.0
			
			
			13.4
			
		


			CAPITALAND COMMERCIAL TRUST
			
			
			C61U
			
			
			16.6
			
			
			42.1
			
			
			-5.0
			
			
			19.3
			
		


			CAPITALAND MALL TRUST
			
			
			C38U
			
			
			3.0
			
			
			19.5
			
			
			12.7
			
			
			16.3
			
		


			MAPLETREE LOGISTICS TRUST
			
			
			M44U
			
			
			10.8
			
			
			38.7
			
			
			1.5
			
			
			24.9
			
		


			HONGKONG LAND HOLDINGS
			
			
			H78
			
			
			-4.8
			
			
			5.5
			
			
			-6.1
			
			
			10.8
			
		


			CITY DEVELOPMENTS
			
			
			C09
			
			
			10.3
			
			
			53.1
			
			
			-33.8
			
			
			12.9
			
		


			SUNTEC REIT
			
			
			T82U
			
			
			13.2
			
			
			37.6
			
			
			-12.8
			
			
			9.5
			
		


			MAPLETREE COMMERCIAL TRUST
			
			
			N2IU
			
			
			14.9
			
			
			23.0
			
			
			7.6
			
			
			25.5
			
		


			UOL GROUP
			
			
			U14
			
			
			-1.5
			
			
			51.2
			
			
			-28.8
			
			
			18.7
			
		


			MAPLETREE NORTH ASIA COMMERC
			
			
			RW0U
			
			
			11.7
			
			
			38.3
			
			
			-1.1
			
			
			22.9
			
		


			KEPPEL REIT
			
			
			K71U
			
			
			17.0
			
			
			30.1
			
			
			-5.2
			
			
			11.3
			
		


			MAPLETREE INDUSTRIAL TRUST
			
			
			ME8U
			
			
			15.8
			
			
			32.2
			
			
			-0.7
			
			
			15.5
			
		


			FRASERS LOGISTICS &amp; INDUSTRI
			
			
			BUOU
			
			
			0.0
			
			
			34.0
			
			
			-4.2
			
			
			19.1
			
		


			KEPPEL DC REIT
			
			
			AJBU
			
			
			26.1
			
			
			27.0
			
			
			-0.7
			
			
			24.6
			
		


			FRASERS CENTREPOINT TRUST
			
			
			J69U
			
			
			9.1
			
			
			24.8
			
			
			2.2
			
			
			20.3
			
		


			ASCOTT RESIDENCE TRUST
			
			
			A68U
			
			
			2.4
			
			
			20.2
			
			
			-6.1
			
			
			22.6
			
		


			FRASERS COMMERCIAL TRUST
			
			
			ND8U
			
			
			7.0
			
			
			27.1
			
			
			-1.7
			
			
			17.7
			
		


			CDL HOSPITALITY TRUSTS
			
			
			J85
			
			
			8.7
			
			
			39.9
			
			
			-8.6
			
			
			13.6
			
		


			YANLORD LAND GROUP
			
			
			Z25
			
			
			33.1
			
			
			25.6
			
			
			-21.6
			
			
			7.9
			
		


			CAPITALAND RETAIL CHINA TRUS
			
			
			AU8U
			
			
			-1.0
			
			
			29.4
			
			
			-12.5
			
			
			16.3
			
		


			ESR-REIT
			
			
			J91U
			
			
			3.6
			
			
			12.0
			
			
			-1.8
			
			
			12.7
			
		


			CROMWELL EUROPEAN REIT
			
			
			CNNU
			
			
			0.0
			
			
			0.0
			
			
			-13.3
			
			
			16.0
			
		


			STARHILL GLOBAL REIT
			
			
			P40U
			
			
			4.7
			
			
			11.6
			
			
			-6.5
			
			
			13.7
			
		


			YING LI INTERNATIONAL REAL E
			
			
			5DM
			
			
			-10.2
			
			
			1.3
			
			
			-23.2
			
			
			20.7
			
		


			CACHE LOGISTICS TRUST
			
			
			K2LU
			
			
			-3.5
			
			
			19.0
			
			
			-12.2
			
			
			12.4
			
		


			FAR EAST HOSPITALITY TRUST
			
			
			Q5T
			
			
			-3.1
			
			
			27.9
			
			
			-10.8
			
			
			9.8
			
		


			MANULIFE US REAL ESTATE INV
			
			
			BTOU
			
			
			0.0
			
			
			18.3
			
			
			-7.2
			
			
			18.5
			
		


			ASCENDAS INDIA TRUST
			
			
			CY6U
			
			
			23.3
			
			
			19.1
			
			
			0.2
			
			
			27.7
			
		


			OUE HOSPITALITY TRUST
			
			
			SK7
			
			
			-1.1
			
			
			38.2
			
			
			-16.0
			
			
			6.6
			
		


			SASSEUR REAL ESTATE INVESTME
			
			
			CRPU
			
			
			0.0
			
			
			0.0
			
			
			0.0
			
			
			31.7
			
		


			OXLEY HOLDINGS
			
			
			5UX
			
			
			1.0
			
			
			71.9
			
			
			-44.7
			
			
			8.0
			
		


			SPH REIT
			
			
			SK6U
			
			
			5.4
			
			
			16.8
			
			
			0.6
			
			
			7.8
			
		


			APAC REALTY
			
			
			CLN
			
			
			0.0
			
			
			0.0
			
			
			-46.4
			
			
			27.8
			
		


			HONG FOK CORP
			
			
			H30
			
			
			-2.4
			
			
			38.2
			
			
			-19.9
			
			
			23.9
			
		


			ASCENDAS HOSPITALITY TRUST
			
			
			Q1P
			
			
			2.9
			
			
			30.8
			
			
			-3.6
			
			
			25.8
			
		


			LIPPO MALLS INDONESIA RETAIL
			
			
			D5IU
			
			
			27.3
			
			
			17.5
			
			
			-50.6
			
			
			28.6
			
		


			WING TAI HOLDINGS
			
			
			W05
			
			
			-6.1
			
			
			47.1
			
			
			-11.8
			
			
			5.2
			
		


			KEPPEL-KBS US REIT
			
			
			CMOU
			
			
			0.0
			
			
			0.0
			
			
			-23.9
			
			
			28.3
			
		


			FRASERS HOSPITALITY TRUST
			
			
			ACV
			
			
			-1.8
			
			
			29.3
			
			
			-4.7
			
			
			4.6
			
		


			AIMS APAC REIT
			
			
			O5RU
			
			
			3.4
			
			
			13.5
			
			
			3.9
			
			
			10.1
			
		


			ACCORDIA GOLF TRUST
			
			
			ADQU
			
			
			31.0
			
			
			17.0
			
			
			-21.1
			
			
			11.1
			
		


			OUE COMMERCIAL REAL ESTATE I
			
			
			TS0U
			
			
			14.6
			
			
			11.0
			
			
			-22.6
			
			
			9.3
			
		


			SOILBUILD BUSINESS SPACE REI
			
			
			SV3U
			
			
			-8.7
			
			
			14.2
			
			
			-6.2
			
			
			8.9
			
		


			OUE
			
			
			LJ3
			
			
			0.5
			
			
			8.2
			
			
			-22.2
			
			
			12.2
			
		


			FRASERS PROPERTY
			
			
			TQ5
			
			
			-1.2
			
			
			39.0
			
			
			-17.4
			
			
			15.1
			
		


			SABANA SHARIAH COMP IND REIT
			
			
			M1GU
			
			
			-33.5
			
			
			12.2
			
			
			6.8
			
			
			18.2
			
		


			TUAN SING HOLDINGS
			
			
			T24
			
			
			-10.6
			
			
			60.8
			
			
			-18.9
			
			
			2.3
			
		


			GUOCOLAND
			
			
			F17
			
			
			4.4
			
			
			28.1
			
			
			-16.3
			
			
			10.0
			
		


			EC WORLD REIT
			
			
			BWCU
			
			
			0.0
			
			
			8.0
			
			
			-1.2
			
			
			16.1
			
		


			DASIN RETAIL TRUST
			
			
			CEDU
			
			
			0.0
			
			
			0.0
			
			
			7.3
			
			
			5.4
			
		


			BUKIT SEMBAWANG ESTATES
			
			
			B61
			
			
			6.7
			
			
			47.1
			
			
			-7.0
			
			
			-1.4
			
		


			IREIT GLOBAL
			
			
			UD1U
			
			
			12.9
			
			
			17.3
			
			
			0.8
			
			
			8.1
			
		


			HO BEE LAND
			
			
			H13
			
			
			3.8
			
			
			24.3
			
			
			0.1
			
			
			4.5
			
		


			PROPNEX
			
			
			OYY
			
			
			0.0
			
			
			0.0
			
			
			0.0
			
			
			18.2
			
		


			UNITED INDUSTRIAL CORP
			
			
			U06
			
			
			-2.8
			
			
			20.6
			
			
			-16.8
			
			
			8.9
			
		


			FORTUNE REIT
			
			
			F25U
			
			
			17.5
			
			
			8.0
			
			
			-0.4
			
			
			23.6
			
		


			BOUSTEAD SINGAPORE
			
			
			F9D
			
			
			-0.6
			
			
			9.8
			
			
			-3.4
			
			
			-2.5
			
		


			SINGHAIYI GROUP
			
			
			5H0
			
			
			-13.4
			
			
			30.7
			
			
			-22.5
			
			
			11.8
			
		


			CENTURION CORP
			
			
			OU8
			
			
			-10.7
			
			
			65.9
			
			
			-16.5
			
			
			1.1
			
		


			Average:
			
			
			 
			
			
			4.1
			
			
			24.7
			
			
			-10.0
			
			
			14.7
			
		

 




			Manufacturing
			
			
			Stock

			Code
			
			
			2016 TR %
			
			
			2017 TR %
			
			
			TR 2018 %
			
			
			2019 TR to 11 June %
			
		


			YANGZIJIANG SHIPBUILDING
			
			
			BS6
			
			
			-22.3
			
			
			86.3
			
			
			-11.4
			
			
			19.2
			
		


			VENTURE CORP
			
			
			V03
			
			
			28.0
			
			
			115.4
			
			
			-29.1
			
			
			19.1
			
		


			SINGAPORE TECH ENGINEERING
			
			
			S63
			
			
			12.3
			
			
			5.0
			
			
			11.8
			
			
			20.3
			
		


			AEM HOLDINGS
			
			
			AWX
			
			
			195.3
			
			
			498.6
			
			
			1.5
			
			
			22.4
			
		


			SEMBCORP MARINE
			
			
			S51
			
			
			-19.3
			
			
			34.9
			
			
			-15.9
			
			
			-1.9
			
		


			HI-P INTERNATIONAL
			
			
			H17
			
			
			4.6
			
			
			326.5
			
			
			-50.8
			
			
			57.1
			
		


			VALUETRONICS HOLDINGS
			
			
			BN2
			
			
			34.3
			
			
			103.5
			
			
			-22.8
			
			
			-2.3
			
		


			SUNPOWER GROUP
			
			
			5GD
			
			
			57.4
			
			
			-11.6
			
			
			-27.6
			
			
			53.0
			
		


			CREATIVE TECHNOLOGY
			
			
			C76
			
			
			-11.9
			
			
			10.9
			
			
			254.2
			
			
			0.5
			
		


			FRENCKEN GROUP
			
			
			E28
			
			
			30.3
			
			
			132.4
			
			
			-18.9
			
			
			53.9
			
		


			HAW PAR CORP
			
			
			H02
			
			
			14.9
			
			
			27.2
			
			
			7.9
			
			
			18.8
			
		


			SUNNINGDALE TECH
			
			
			BHQ
			
			
			22.4
			
			
			83.6
			
			
			-21.9
			
			
			-2.8
			
		


			FU YU CORP
			
			
			F13
			
			
			27.2
			
			
			6.6
			
			
			10.1
			
			
			13.2
			
		


			SARINE TECHNOLOGIES
			
			
			U77
			
			
			20.9
			
			
			-42.4
			
			
			-52.0
			
			
			-29.2
			
		


			RIVERSTONE HOLDINGS
			
			
			AP4
			
			
			-25.0
			
			
			25.6
			
			
			7.9
			
			
			-17.9
			
		


			INNOTEK
			
			
			M14
			
			
			48.6
			
			
			32.7
			
			
			18.3
			
			
			30.0
			
		


			MANUFACTURING INTEGRATION TE
			
			
			M11
			
			
			-25.7
			
			
			48.3
			
			
			18.1
			
			
			22.0
			
		


			CHUAN HUP HOLDINGS
			
			
			C33
			
			
			-15.7
			
			
			37.5
			
			
			-3.7
			
			
			32.1
			
		


			JEP HOLDINGS
			
			
			1J4
			
			
			-31.0
			
			
			86.2
			
			
			-3.6
			
			
			12.6
			
		


			HANWELL HOLDINGS
			
			
			DM0
			
			
			-9.4
			
			
			31.3
			
			
			-43.6
			
			
			41.5
			
		


			MIYOSHI
			
			
			M03
			
			
			19.0
			
			
			62.8
			
			
			-39.6
			
			
			4.9
			
		


			AVARGA
			
			
			U09
			
			
			64.7
			
			
			1.8
			
			
			-23.4
			
			
			20.7
			
		


			HALCYON AGRI CORP
			
			
			5VJ
			
			
			-8.3
			
			
			-5.7
			
			
			-29.8
			
			
			24.4
			
		


			Average:
			
			
			 
			
			
			17.9
			
			
			73.8
			
			
			-2.8
			
			
			17.9
			
		

 




			F&amp;B
			
			
			Stock

			Code
			
			
			2016 TR %
			
			
			2017 TR %
			
			
			TR 2018 %
			
			
			2019 TR to 11 June %
			
		


			THAI BEVERAGE PCL
			
			
			Y92
			
			
			27.2
			
			
			11.3
			
			
			-31.7
			
			
			40.8
			
		


			WILMAR INTERNATIONAL
			
			
			F34
			
			
			25.0
			
			
			-12.1
			
			
			4.3
			
			
			10.8
			
		


			SATS
			
			
			S58
			
			
			30.9
			
			
			10.9
			
			
			-7.2
			
			
			8.2
			
		


			JAPFA
			
			
			UD2
			
			
			94.0
			
			
			-42.8
			
			
			44.6
			
			
			-19.6
			
		


			OLAM INTERNATIONAL
			
			
			O32
			
			
			12.2
			
			
			6.5
			
			
			-15.9
			
			
			15.7
			
		


			KOUFU GROUP
			
			
			VL6
			
			
			0.0
			
			
			0.0
			
			
			0.0
			
			
			14.8
			
		


			SINO GRANDNESS FOOD INDUSTRY
			
			
			T4B
			
			
			-33.8
			
			
			-8.9
			
			
			-38.2
			
			
			-61.0
			
		


			DELFI
			
			
			P34
			
			
			12.0
			
			
			-35.1
			
			
			-5.3
			
			
			-6.8
			
		


			QAF
			
			
			Q01
			
			
			37.8
			
			
			-16.4
			
			
			-45.0
			
			
			36.5
			
		


			JUMBO GROUP
			
			
			42R
			
			
			49.4
			
			
			-9.6
			
			
			-31.4
			
			
			1.7
			
		


			FRASER AND NEAVE
			
			
			F99
			
			
			2.8
			
			
			26.0
			
			
			-32.1
			
			
			4.4
			
		


			BREADTALK GROUP
			
			
			CTN
			
			
			5.4
			
			
			52.1
			
			
			-1.6
			
			
			-2.5
			
		


			JB FOODS
			
			
			BEW
			
			
			32.0
			
			
			69.2
			
			
			38.7
			
			
			11.3
			
		


			KIMLY
			
			
			1D0
			
			
			0.0
			
			
			0.0
			
			
			-30.6
			
			
			2.8
			
		


			Average:
			
			
			 
			
			
			21.1
			
			
			3.7
			
			
			-10.8
			
			
			4.1
			
		

Source: SGX StockFacts, Bloomberg (Data as of 11 June 2019). Note TR = Total Return which assumes dividends are reinvested.

Distinct drivers of the three sectors included interest rate outlooks and property prices for real estate, technological advancements, value chain integration and global trade for manufacturing while incomes, tastes, preferences and tourism drive F&amp;B sales.



Real Estate, Manufacturing and F&B Shares on the Move in 1H19    

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<ul>
<li>
The iEdge SG MOE Index is a free-float, market capitalisation-weighted index that measures the performance of listed maritime and offshore (MOE) companies in Singapore. The Index comprises 12 constituents, with a combined market cap of about S$30 billion. 
	 </li>
	<li>
In the YTD, the five, best-performing Index constituents were: Yangzijiang Shipbuilding (+14.4%), Marco Polo Marine (+5.3%), Sembcorp Marine (+5.2%), COSCO Shipping (+4.5%), and Keppel Corp (+3.7%). They have averaged a total return of +6.6% over the period. 
	 </li>
	<li>The five Index constituents that posted the strongest price rebound from their 52W lows were: Yangzijiang Shipbuilding (70.2%), Vallianz (26.7%), Mermaid Maritime (12.5%), COSCO Shipping (9.7%), and Sembcorp Marine (8.7%). They have averaged a 25.6% rebound from their respective 12M troughs, in line with the YTD rebound in oil prices.</li>
</ul>
 

The iEdge SG MOE Index is a free-float, market capitalisation-weighted index that measures the performance of listed maritime and offshore (MOE) companies in Singapore. Constituents in the Index include shipyard operators, shipping companies as well as those providing port and offshore services. The Index comprises 12 constituents with a combined market capitalisation of about S$30 billion.

The components with the five biggest weights – Yangzijiang Shipbuilding (15.21%), Sembcorp Marine (11.04%), Hutchison Port Holdings Trust (10.73%), Keppel Corp (10.59%), and COSCO Shipping International (10.55%) – account for more than half the Index’s weighting.

Singapore’s offshore and marine industry has been battered by a slump in oil prices over the past few years, cutbacks in exploration and production (E&amp;P) spending, weak charter rates and delayed projects. This has forced a number of players to cut costs and restructure debt.

However, since the start of 2019, WTI crude has gained nearly 30%, and is set for its strongest advance since 2009. The Organization of Petroleum Exporting Countries (OPEC) and its partners – known as OPEC+ – have reduced output, while US sanctions on Iran and Venezuela have tightened supplies. Over the weekend, OPEC+ met in Azerbaijan to monitor their crude supply reduction pact, and said they would exceed commitments in the coming months. On Sunday, Saudi Arabia signalled that producers may need to extend their 1.2 million barrels per day of supply curbs past June into the second half of the year.
<figure>
 <img src="https://api2.sgx.com/sites/default/files/2019-03/WTI%20CRUDE_0.PNG" alt="WTI crude">
 </figure>
 <div class="content-caption">WTI crude</div>
In the 2019 year-to-date, the five, best-performing Index constituents were: Yangzijiang Shipbuilding (+14.4%), Marco Polo Marine (+5.3%), Sembcorp Marine (+5.2%), COSCO Shipping International (+4.5%), and Keppel Corp (+3.7%). They averaged a total return of +6.6% in the YTD, bringing their one-year and three-year total returns to -22.5% and -4.4%.

The table details the 12 constituents of the iEdge SG MOE Index, sorted by YTD total return.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y (%)
			</td>
			<td>
			Total Return 3Y (%)
			</td>
			<td>
			P/E (x)
			</td>
			<td>
			P/B (x)
			</td>
		</tr>
<tr>
<td>
			YANGZIJIANG SHIPBUILDING
			</td>
			<td>
			BS6
			</td>
			<td>
			14.4
			</td>
			<td>
			14.7
			</td>
			<td>
			59.9
			</td>
			<td>
			7.4
			</td>
			<td>
			1.0
			</td>
		</tr>
<tr>
<td>
			MARCO POLO MARINE
			</td>
			<td>
			5LY
			</td>
			<td>
			5.3
			</td>
			<td>
			-52.4
			</td>
			<td>
			-89.6
			</td>
			<td>
			0.4
			</td>
			<td>
			0.6
			</td>
		</tr>
<tr>
<td>
			SEMBCORP MARINE
			</td>
			<td>
			S51
			</td>
			<td>
			5.2
			</td>
			<td>
			-22.9
			</td>
			<td>
			0.3
			</td>
			<td>
			NA
			</td>
			<td>
			1.5
			</td>
		</tr>
<tr>
<td>
			COSCO SHIPPING INTL
			</td>
			<td>
			F83
			</td>
			<td>
			4.5
			</td>
			<td>
			-33.7
			</td>
			<td>
			-9.2
			</td>
			<td>
			59.5
			</td>
			<td>
			1.5
			</td>
		</tr>
<tr>
<td>
			KEPPEL CORP 
			</td>
			<td>
			BN4
			</td>
			<td>
			3.7
			</td>
			<td>
			-18.2
			</td>
			<td>
			16.7
			</td>
			<td>
			12.1
			</td>
			<td>
			1.0
			</td>
		</tr>
<tr>
<td>
			HUTCHISON PORT HOLDINGS TRUST
			</td>
			<td>
			NS8U
			</td>
			<td>
			1.6
			</td>
			<td>
			-20.8
			</td>
			<td>
			-40.6
			</td>
			<td>
			NA
			</td>
			<td>
			0.6
			</td>
		</tr>
<tr>
<td>
			SEMBCORP INDUSTRIES
			</td>
			<td>
			U96
			</td>
			<td>
			-0.8
			</td>
			<td>
			-17.1
			</td>
			<td>
			-9.8
			</td>
			<td>
			15.2
			</td>
			<td>
			0.7
			</td>
		</tr>
<tr>
<td>
			MERMAID MARITIME
			</td>
			<td>
			DU4
			</td>
			<td>
			-1.1
			</td>
			<td>
			-44.5
			</td>
			<td>
			-16.5
			</td>
			<td>
			NA
			</td>
			<td>
			0.3
			</td>
		</tr>
<tr>
<td>
			EZION HOLDINGS
			</td>
			<td>
			5ME
			</td>
			<td>
			-6.5
			</td>
			<td>
			-78.2
			</td>
			<td>
			-92.1
			</td>
			<td>
			NA
			</td>
			<td>
			-0.4
			</td>
		</tr>
<tr>
<td>
			AUSGROUP LTD
			</td>
			<td>
			5GJ
			</td>
			<td>
			-12.5
			</td>
			<td>
			-46.7
			</td>
			<td>
			-76.0
			</td>
			<td>
			6.1
			</td>
			<td>
			0.9
			</td>
		</tr>
<tr>
<td>
			NORDIC GROUP
			</td>
			<td>
			MR7
			</td>
			<td>
			-21.3
			</td>
			<td>
			-43.9
			</td>
			<td>
			88.5
			</td>
			<td>
			10.7
			</td>
			<td>
			1.5
			</td>
		</tr>
<tr>
<td>
			VALLIANZ HOLDING
			</td>
			<td>
			WPC
			</td>
			<td>
			-36.0
			</td>
			<td>
			-50.8
			</td>
			<td>
			-86.2
			</td>
			<td>
			7.5
			</td>
			<td>
			0.3
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 15 March 2019)

The five Index constituents that posted the strongest price recovery from their 52-week lows were: Yangzijiang Shipbuilding (70.2%), Vallianz Holdings (26.7%), Mermaid Maritime (12.5%), COSCO Shipping (9.7%), and Sembcorp Marine (8.7%). These five stocks have averaged a 25.6% rebound from their respective 12-month troughs.

The table details the 12 constituents of the iEdge SG MOE Index, sorted by percentage price gain from 52-week lows.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Index Weight (%)
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			Last Price (S$)
			</td>
			<td>
			52W Low Price (S$)
			</td>
			<td>
			52W Low Date
			</td>
			<td>
			% Chg vs 52W Low
			</td>
		</tr>
<tr>
<td>
			YANGZIJIANG SHIPBUILDING
			</td>
			<td>
			BS6
			</td>
			<td>
			15.21
			</td>
			<td>
			5,721
			</td>
			<td>
			1.43
			</td>
			<td>
			0.84
			</td>
			<td>
			07/18/2018
			</td>
			<td>
			70.2
			</td>
		</tr>
<tr>
<td>
			VALLIANZ HOLDINGS
			</td>
			<td>
			WPC
			</td>
			<td>
			2.88
			</td>
			<td>
			109
			</td>
			<td>
			0.19
			</td>
			<td>
			0.15
			</td>
			<td>
			10/29/2018
			</td>
			<td>
			26.7
			</td>
		</tr>
<tr>
<td>
			MERMAID MARITIME
			</td>
			<td>
			DU4
			</td>
			<td>
			6.75
			</td>
			<td>
			120
			</td>
			<td>
			0.09
			</td>
			<td>
			0.08
			</td>
			<td>
			03/11/2019
			</td>
			<td>
			12.5
			</td>
		</tr>
<tr>
<td>
			COSCO SHIPPING INTL
			</td>
			<td>
			F83
			</td>
			<td>
			10.55
			</td>
			<td>
			773
			</td>
			<td>
			0.34
			</td>
			<td>
			0.31
			</td>
			<td>
			12/26/2018
			</td>
			<td>
			9.7
			</td>
		</tr>
<tr>
<td>
			SEMBCORP MARINE
			</td>
			<td>
			S51
			</td>
			<td>
			11.04
			</td>
			<td>
			3,363
			</td>
			<td>
			1.62
			</td>
			<td>
			1.49
			</td>
			<td>
			12/26/2018
			</td>
			<td>
			8.7
			</td>
		</tr>
<tr>
<td>
			KEPPEL CORP 
			</td>
			<td>
			BN4
			</td>
			<td>
			10.59
			</td>
			<td>
			11,074
			</td>
			<td>
			6.13
			</td>
			<td>
			5.67
			</td>
			<td>
			12/26/2018
			</td>
			<td>
			8.1
			</td>
		</tr>
<tr>
<td>
			HUTCHISON PORT HOLDINGS TRUST
			</td>
			<td>
			NS8U
			</td>
			<td>
			10.73
			</td>
			<td>
			2,835
			</td>
			<td>
			0.32
			</td>
			<td>
			0.30
			</td>
			<td>
			03/01/2019
			</td>
			<td>
			6.7
			</td>
		</tr>
<tr>
<td>
			SEMBCORP INDUSTRIES
			</td>
			<td>
			U96
			</td>
			<td>
			10.52
			</td>
			<td>
			4,550
			</td>
			<td>
			2.52
			</td>
			<td>
			2.43
			</td>
			<td>
			12/26/2018
			</td>
			<td>
			3.7
			</td>
		</tr>
<tr>
<td>
			EZION HOLDINGS
			</td>
			<td>
			5ME
			</td>
			<td>
			6.57
			</td>
			<td>
			160
			</td>
			<td>
			0.04
			</td>
			<td>
			0.04
			</td>
			<td>
			11/22/2018
			</td>
			<td>
			0.0
			</td>
		</tr>
<tr>
<td>
			NORDIC GROUP
			</td>
			<td>
			MR7
			</td>
			<td>
			4.66
			</td>
			<td>
			124
			</td>
			<td>
			0.31
			</td>
			<td>
			0.31
			</td>
			<td>
			03/12/2019
			</td>
			<td>
			0.0
			</td>
		</tr>
<tr>
<td>
			AUSGROUP LTD
			</td>
			<td>
			5GJ
			</td>
			<td>
			5.22
			</td>
			<td>
			88
			</td>
			<td>
			0.03
			</td>
			<td>
			0.03
			</td>
			<td>
			03/08/2019
			</td>
			<td>
			0.0
			</td>
		</tr>
<tr>
<td>
			MARCO POLO MARINE
			</td>
			<td>
			5LY
			</td>
			<td>
			5.29
			</td>
			<td>
			70
			</td>
			<td>
			0.02
			</td>
			<td>
			0.02
			</td>
			<td>
			12/26/2018
			</td>
			<td>
			0.0
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 15 March 2019)
</body></html>





The iEdge SG MOE Index is a free-float, market capitalisation-weighted index that measures the performance of listed maritime and offshore (MOE) companies in Singapore. The Index comprises 12 constituents, with a combined market cap of about S$30 billion. 
	 
	
In the YTD, the five, best-performing Index constituents were: Yangzijiang Shipbuilding (+14.4%), Marco Polo Marine (+5.3%), Sembcorp Marine (+5.2%), COSCO Shipping (+4.5%), and Keppel Corp (+3.7%). They have averaged a total return of +6.6% over the period. 
	 
	The five Index constituents that posted the strongest price rebound from their 52W lows were: Yangzijiang Shipbuilding (70.2%), Vallianz (26.7%), Mermaid Maritime (12.5%), COSCO Shipping (9.7%), and Sembcorp Marine (8.7%). They have averaged a 25.6% rebound from their respective 12M troughs, in line with the YTD rebound in oil prices.

 

The iEdge SG MOE Index is a free-float, market capitalisation-weighted index that measures the performance of listed maritime and offshore (MOE) companies in Singapore. Constituents in the Index include shipyard operators, shipping companies as well as those providing port and offshore services. The Index comprises 12 constituents with a combined market capitalisation of about S$30 billion.

The components with the five biggest weights – Yangzijiang Shipbuilding (15.21%), Sembcorp Marine (11.04%), Hutchison Port Holdings Trust (10.73%), Keppel Corp (10.59%), and COSCO Shipping International (10.55%) – account for more than half the Index’s weighting.

Singapore’s offshore and marine industry has been battered by a slump in oil prices over the past few years, cutbacks in exploration and production (E&amp;P) spending, weak charter rates and delayed projects. This has forced a number of players to cut costs and restructure debt.

However, since the start of 2019, WTI crude has gained nearly 30%, and is set for its strongest advance since 2009. The Organization of Petroleum Exporting Countries (OPEC) and its partners – known as OPEC+ – have reduced output, while US sanctions on Iran and Venezuela have tightened supplies. Over the weekend, OPEC+ met in Azerbaijan to monitor their crude supply reduction pact, and said they would exceed commitments in the coming months. On Sunday, Saudi Arabia signalled that producers may need to extend their 1.2 million barrels per day of supply curbs past June into the second half of the year.

      
    
    WTI crude
In the 2019 year-to-date, the five, best-performing Index constituents were: Yangzijiang Shipbuilding (+14.4%), Marco Polo Marine (+5.3%), Sembcorp Marine (+5.2%), COSCO Shipping International (+4.5%), and Keppel Corp (+3.7%). They averaged a total return of +6.6% in the YTD, bringing their one-year and three-year total returns to -22.5% and -4.4%.

The table details the 12 constituents of the iEdge SG MOE Index, sorted by YTD total return.




			Name
			
			
			SGX Code
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
			
			Total Return 3Y (%)
			
			
			P/E (x)
			
			
			P/B (x)
			
		


			YANGZIJIANG SHIPBUILDING
			
			
			BS6
			
			
			14.4
			
			
			14.7
			
			
			59.9
			
			
			7.4
			
			
			1.0
			
		


			MARCO POLO MARINE
			
			
			5LY
			
			
			5.3
			
			
			-52.4
			
			
			-89.6
			
			
			0.4
			
			
			0.6
			
		


			SEMBCORP MARINE
			
			
			S51
			
			
			5.2
			
			
			-22.9
			
			
			0.3
			
			
			NA
			
			
			1.5
			
		


			COSCO SHIPPING INTL
			
			
			F83
			
			
			4.5
			
			
			-33.7
			
			
			-9.2
			
			
			59.5
			
			
			1.5
			
		


			KEPPEL CORP 
			
			
			BN4
			
			
			3.7
			
			
			-18.2
			
			
			16.7
			
			
			12.1
			
			
			1.0
			
		


			HUTCHISON PORT HOLDINGS TRUST
			
			
			NS8U
			
			
			1.6
			
			
			-20.8
			
			
			-40.6
			
			
			NA
			
			
			0.6
			
		


			SEMBCORP INDUSTRIES
			
			
			U96
			
			
			-0.8
			
			
			-17.1
			
			
			-9.8
			
			
			15.2
			
			
			0.7
			
		


			MERMAID MARITIME
			
			
			DU4
			
			
			-1.1
			
			
			-44.5
			
			
			-16.5
			
			
			NA
			
			
			0.3
			
		


			EZION HOLDINGS
			
			
			5ME
			
			
			-6.5
			
			
			-78.2
			
			
			-92.1
			
			
			NA
			
			
			-0.4
			
		


			AUSGROUP LTD
			
			
			5GJ
			
			
			-12.5
			
			
			-46.7
			
			
			-76.0
			
			
			6.1
			
			
			0.9
			
		


			NORDIC GROUP
			
			
			MR7
			
			
			-21.3
			
			
			-43.9
			
			
			88.5
			
			
			10.7
			
			
			1.5
			
		


			VALLIANZ HOLDING
			
			
			WPC
			
			
			-36.0
			
			
			-50.8
			
			
			-86.2
			
			
			7.5
			
			
			0.3
			
		

Source: Bloomberg &amp; StockFacts (data as of 15 March 2019)

The five Index constituents that posted the strongest price recovery from their 52-week lows were: Yangzijiang Shipbuilding (70.2%), Vallianz Holdings (26.7%), Mermaid Maritime (12.5%), COSCO Shipping (9.7%), and Sembcorp Marine (8.7%). These five stocks have averaged a 25.6% rebound from their respective 12-month troughs.

The table details the 12 constituents of the iEdge SG MOE Index, sorted by percentage price gain from 52-week lows.




			Name
			
			
			SGX Code
			
			
			Index Weight (%)
			
			
			Market Cap (S$M)
			
			
			Last Price (S$)
			
			
			52W Low Price (S$)
			
			
			52W Low Date
			
			
			% Chg vs 52W Low
			
		


			YANGZIJIANG SHIPBUILDING
			
			
			BS6
			
			
			15.21
			
			
			5,721
			
			
			1.43
			
			
			0.84
			
			
			07/18/2018
			
			
			70.2
			
		


			VALLIANZ HOLDINGS
			
			
			WPC
			
			
			2.88
			
			
			109
			
			
			0.19
			
			
			0.15
			
			
			10/29/2018
			
			
			26.7
			
		


			MERMAID MARITIME
			
			
			DU4
			
			
			6.75
			
			
			120
			
			
			0.09
			
			
			0.08
			
			
			03/11/2019
			
			
			12.5
			
		


			COSCO SHIPPING INTL
			
			
			F83
			
			
			10.55
			
			
			773
			
			
			0.34
			
			
			0.31
			
			
			12/26/2018
			
			
			9.7
			
		


			SEMBCORP MARINE
			
			
			S51
			
			
			11.04
			
			
			3,363
			
			
			1.62
			
			
			1.49
			
			
			12/26/2018
			
			
			8.7
			
		


			KEPPEL CORP 
			
			
			BN4
			
			
			10.59
			
			
			11,074
			
			
			6.13
			
			
			5.67
			
			
			12/26/2018
			
			
			8.1
			
		


			HUTCHISON PORT HOLDINGS TRUST
			
			
			NS8U
			
			
			10.73
			
			
			2,835
			
			
			0.32
			
			
			0.30
			
			
			03/01/2019
			
			
			6.7
			
		


			SEMBCORP INDUSTRIES
			
			
			U96
			
			
			10.52
			
			
			4,550
			
			
			2.52
			
			
			2.43
			
			
			12/26/2018
			
			
			3.7
			
		


			EZION HOLDINGS
			
			
			5ME
			
			
			6.57
			
			
			160
			
			
			0.04
			
			
			0.04
			
			
			11/22/2018
			
			
			0.0
			
		


			NORDIC GROUP
			
			
			MR7
			
			
			4.66
			
			
			124
			
			
			0.31
			
			
			0.31
			
			
			03/12/2019
			
			
			0.0
			
		


			AUSGROUP LTD
			
			
			5GJ
			
			
			5.22
			
			
			88
			
			
			0.03
			
			
			0.03
			
			
			03/08/2019
			
			
			0.0
			
		


			MARCO POLO MARINE
			
			
			5LY
			
			
			5.29
			
			
			70
			
			
			0.02
			
			
			0.02
			
			
			12/26/2018
			
			
			0.0
			
		

Source: Bloomberg &amp; StockFacts (data as of 15 March 2019)



Five Best Performers of SGX MOE Index Average 7% YTD Gain

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<ul>
<li>
WTI crude has advanced nearly 15% since the start of 2019 as OPEC and its allies began cutting production to ease worries over a supply glut, and the US government slapped sanctions on Venezuela’s state-owned oil firm PdVSA. 
	 </li>
	<li>
In the YTD, Singapore’s three biggest shipyard stocks have averaged a total return of +6.2%, bringing their 1Y and 3Y total returns to -24.1% and +41.3% respectively. In comparison, the benchmark STI has registered a total return of +4.4% in the same period. 
	 </li>
	<li>
Following crude’s rally, these three largest shipyard plays are now trading marginally above par value at an average P/B ratio of 1.2x. Their share prices have also recovered in tandem with higher oil prices – rebounding an average 27% from their 52W lows. 
	 </li>
</ul>
SGX lists a total of 12 shipyard stocks, which are classified under the Industrials Sector. Among these, the three largest operators are Keppel Corp, Yangzijiang Shipbuilding, and Sembcorp Marine. They have a combined market capitalisation of nearly S$20 billion.

iEdge SG MOE Index

Shipyard stocks are well-represented in SGX’s iEdge SG MOE Index – a free-float, market capitalisation-weighted index that measures the performance of listed maritime and offshore (MOE) companies in Singapore.

The Index comprises 13 constituents, which have a combined market capitalisation of nearly S$30 billion. Constituents of the Index include shipyard operators, shipping companies and companies providing offshore services. Yangzijiang Shipbuilding has the second highest weighting in the Index, at 6.94%, while Sembcorp Marine has a weighting of 5.16%, followed by Keppel Corp with 5.10%.

Crude Price Rally

Over the past few years, Singapore’s offshore and marine industry has been battered by a slump in oil prices, cutbacks in exploration and production (E&amp;P) spending, weak charter rates and delayed projects. This has forced a number of players to cut costs and restructure debt.

Offshore and marine stocks, including shipyard operators, are seen as a proxy to higher crude prices. WTI crude has advanced nearly 15% since the start of 2019 as the Organization of Petroleum Exporting Countries (OPEC) and its allies began cutting production to ease worries over a supply glut, and after the US government slapped sanctions on Venezuela’s state-owned oil firm PdVSA earlier this week. However, analysts expect price volatility to continue, due to ongoing trade tensions and concerns over China’s slowing economic growth.
<figure>
 <img src="https://api2.sgx.com/sites/default/files/2019-01/12.PNG" alt="WTI Crude Oil">
 </figure>
 <div class="content-caption">WTI Crude Oil</div>
Prices, Valuations Rebound

In the 2019 year-to-date, Singapore’s three biggest shipyard stocks – Keppel Corp, Yangzijiang Shipbuilding and Sembcorp Marine – have averaged a total return of +6.2%, bringing their one-year and three-year total returns to -24.1% and +41.3% respectively. In comparison, the benchmark Straits Times Index has registered a total return of +4.4% in the YTD.

The table below details SGX’s three largest shipyard operators, sorted by YTD total returns.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$ mln)
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y (%)
			</td>
			<td>
			Total Return 3Y (%)
			</td>
			<td>
			P/B (x)
			</td>
			<td>
			P/B 5Y Avg (x)
			</td>
			<td>
			ROE (%)
			</td>
		</tr>
<tr>
<td>
			YANGZIJIANG SHIPBUILDING
			</td>
			<td>
			BS6
			</td>
			<td>
			5,366.2
			</td>
			<td>
			8.0
			</td>
			<td>
			-11.5
			</td>
			<td>
			64.8
			</td>
			<td>
			1.0
			</td>
			<td>
			0.9
			</td>
			<td>
			11.6
			</td>
		</tr>
<tr>
<td>
			SEMBCORP MARINE
			</td>
			<td>
			S51
			</td>
			<td>
			3,425.3
			</td>
			<td>
			5.8
			</td>
			<td>
			-35.8
			</td>
			<td>
			13.4
			</td>
			<td>
			1.5
			</td>
			<td>
			1.7
			</td>
			<td>
			-4.7
			</td>
		</tr>
<tr>
<td>
			KEPPEL CORP
			</td>
			<td>
			BN4
			</td>
			<td>
			11,110.0
			</td>
			<td>
			4.9
			</td>
			<td>
			-24.9
			</td>
			<td>
			45.6
			</td>
			<td>
			1.0
			</td>
			<td>
			1.1
			</td>
			<td>
			8.3
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			6.2
			</td>
			<td>
			-24.1
			</td>
			<td>
			41.3
			</td>
			<td>
			1.2
			</td>
			<td>
			1.2
			</td>
			<td>
			5.1
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 25 January 2019)

Following the rally in crude prices, SGX’s three largest shipyard stocks are now trading marginally above par value at an average price-to-book (P/B) ratio of 1.2x. In particular, Keppel Corp and Yangzijiang Shipbuilding are trading at 1.0x, compared with their five-year P/B averages of 1.1x and 0.9x respectively, while Sembcorp Marine is trading at 1.5x, compared with its five-year P/B average of 1.7x.

The share prices of the three largest shipyard operators have also recovered in tandem with higher oil prices – rebounding an average of 26.5% from their 52-week lows. Keppel Corp and Sembcorp Marine have recovered 9.3% and 9.4% respectively from their 12-month troughs, while Yangzijiang Shipbuilding has registered a 60.7% price gain from its 52-week low.

The table below details the 52-week low prices, dates and percentage changes from current price levels of the three largest shipyard operators, sorted by market capitalisation.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$ mln)
			</td>
			<td>
			Last Price
			</td>
			<td>
			Price Chg vs 52W Low (%)
			</td>
			<td>
			52W Low
			</td>
			<td>
			52W Low Date
			</td>
		</tr>
<tr>
<td>
			KEPPEL CORP
			</td>
			<td>
			BN4
			</td>
			<td>
			11,110.0
			</td>
			<td>
			6.20
			</td>
			<td>
			9.3
			</td>
			<td>
			5.67
			</td>
			<td>
			26-Dec-18
			</td>
		</tr>
<tr>
<td>
			YANGZIJIANG SHIPBUILDING
			</td>
			<td>
			BS6
			</td>
			<td>
			5,366.2
			</td>
			<td>
			1.35
			</td>
			<td>
			60.7
			</td>
			<td>
			0.84
			</td>
			<td>
			18-Jul-18
			</td>
		</tr>
<tr>
<td>
			SEMBCORP MARINE
			</td>
			<td>
			S51
			</td>
			<td>
			3,425.3
			</td>
			<td>
			1.63
			</td>
			<td>
			9.4
			</td>
			<td>
			1.49
			</td>
			<td>
			26-Dec-18
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			26.5
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
Source: Bloomberg &amp; StockFacts (data as of 25 January 2019)

P/B ratios are one of the valuation metrics used to value the MOE Sector, especially when earnings may be depressed or negative, which could result in abnormal or unavailable price-to-earnings (P/E) ratios. Aside from analysts’ expectations and earnings estimates, investors should also look out for other key indicators for the sector, such as order book momentum, positive operating cash flows, and balance sheet strength.

Gradual Sector Recovery 

Analysts have noted that although the worst appears to be over for Singapore shipyards, the industry recovery remains protracted.

“The overall conventional shipping market is expected to remain on a recovery path, albeit gradual. Global order book-to-fleet ratio has dropped to a low of less than 10%, implying moderating new supply going forward,” DBS Research noted in a sector strategy <a href="https://www.dbs.com.sg/treasures/aics/templatedata/article/generic/data/en/GR/112018/181126_insights_pitch_on_value.xml">report</a> published on 26 November 2018.

On the scrapping side, the new Ballast Water Management Convention rule with its two-year gestation period – which took effect in September 2017 – should continue to drive demolition of old vessels, but demand growth will still remain slow, given lower global economic growth and continuing trade tensions, the bank said in the report.

“Against this backdrop, we expect shipbuilding consolidation to continue, and the market to improve with a moderate uptick in orders,” the report added.
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WTI crude has advanced nearly 15% since the start of 2019 as OPEC and its allies began cutting production to ease worries over a supply glut, and the US government slapped sanctions on Venezuela’s state-owned oil firm PdVSA. 
	 
	
In the YTD, Singapore’s three biggest shipyard stocks have averaged a total return of +6.2%, bringing their 1Y and 3Y total returns to -24.1% and +41.3% respectively. In comparison, the benchmark STI has registered a total return of +4.4% in the same period. 
	 
	
Following crude’s rally, these three largest shipyard plays are now trading marginally above par value at an average P/B ratio of 1.2x. Their share prices have also recovered in tandem with higher oil prices – rebounding an average 27% from their 52W lows. 
	 

SGX lists a total of 12 shipyard stocks, which are classified under the Industrials Sector. Among these, the three largest operators are Keppel Corp, Yangzijiang Shipbuilding, and Sembcorp Marine. They have a combined market capitalisation of nearly S$20 billion.

iEdge SG MOE Index

Shipyard stocks are well-represented in SGX’s iEdge SG MOE Index – a free-float, market capitalisation-weighted index that measures the performance of listed maritime and offshore (MOE) companies in Singapore.

The Index comprises 13 constituents, which have a combined market capitalisation of nearly S$30 billion. Constituents of the Index include shipyard operators, shipping companies and companies providing offshore services. Yangzijiang Shipbuilding has the second highest weighting in the Index, at 6.94%, while Sembcorp Marine has a weighting of 5.16%, followed by Keppel Corp with 5.10%.

Crude Price Rally

Over the past few years, Singapore’s offshore and marine industry has been battered by a slump in oil prices, cutbacks in exploration and production (E&amp;P) spending, weak charter rates and delayed projects. This has forced a number of players to cut costs and restructure debt.

Offshore and marine stocks, including shipyard operators, are seen as a proxy to higher crude prices. WTI crude has advanced nearly 15% since the start of 2019 as the Organization of Petroleum Exporting Countries (OPEC) and its allies began cutting production to ease worries over a supply glut, and after the US government slapped sanctions on Venezuela’s state-owned oil firm PdVSA earlier this week. However, analysts expect price volatility to continue, due to ongoing trade tensions and concerns over China’s slowing economic growth.

      
    
    WTI Crude Oil
Prices, Valuations Rebound

In the 2019 year-to-date, Singapore’s three biggest shipyard stocks – Keppel Corp, Yangzijiang Shipbuilding and Sembcorp Marine – have averaged a total return of +6.2%, bringing their one-year and three-year total returns to -24.1% and +41.3% respectively. In comparison, the benchmark Straits Times Index has registered a total return of +4.4% in the YTD.

The table below details SGX’s three largest shipyard operators, sorted by YTD total returns.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$ mln)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
			
			Total Return 3Y (%)
			
			
			P/B (x)
			
			
			P/B 5Y Avg (x)
			
			
			ROE (%)
			
		


			YANGZIJIANG SHIPBUILDING
			
			
			BS6
			
			
			5,366.2
			
			
			8.0
			
			
			-11.5
			
			
			64.8
			
			
			1.0
			
			
			0.9
			
			
			11.6
			
		


			SEMBCORP MARINE
			
			
			S51
			
			
			3,425.3
			
			
			5.8
			
			
			-35.8
			
			
			13.4
			
			
			1.5
			
			
			1.7
			
			
			-4.7
			
		


			KEPPEL CORP
			
			
			BN4
			
			
			11,110.0
			
			
			4.9
			
			
			-24.9
			
			
			45.6
			
			
			1.0
			
			
			1.1
			
			
			8.3
			
		


			Average
			
			
			 
			
			
			 
			
			
			6.2
			
			
			-24.1
			
			
			41.3
			
			
			1.2
			
			
			1.2
			
			
			5.1
			
		

Source: Bloomberg &amp; StockFacts (data as of 25 January 2019)

Following the rally in crude prices, SGX’s three largest shipyard stocks are now trading marginally above par value at an average price-to-book (P/B) ratio of 1.2x. In particular, Keppel Corp and Yangzijiang Shipbuilding are trading at 1.0x, compared with their five-year P/B averages of 1.1x and 0.9x respectively, while Sembcorp Marine is trading at 1.5x, compared with its five-year P/B average of 1.7x.

The share prices of the three largest shipyard operators have also recovered in tandem with higher oil prices – rebounding an average of 26.5% from their 52-week lows. Keppel Corp and Sembcorp Marine have recovered 9.3% and 9.4% respectively from their 12-month troughs, while Yangzijiang Shipbuilding has registered a 60.7% price gain from its 52-week low.

The table below details the 52-week low prices, dates and percentage changes from current price levels of the three largest shipyard operators, sorted by market capitalisation.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$ mln)
			
			
			Last Price
			
			
			Price Chg vs 52W Low (%)
			
			
			52W Low
			
			
			52W Low Date
			
		


			KEPPEL CORP
			
			
			BN4
			
			
			11,110.0
			
			
			6.20
			
			
			9.3
			
			
			5.67
			
			
			26-Dec-18
			
		


			YANGZIJIANG SHIPBUILDING
			
			
			BS6
			
			
			5,366.2
			
			
			1.35
			
			
			60.7
			
			
			0.84
			
			
			18-Jul-18
			
		


			SEMBCORP MARINE
			
			
			S51
			
			
			3,425.3
			
			
			1.63
			
			
			9.4
			
			
			1.49
			
			
			26-Dec-18
			
		


			Average
			
			
			 
			
			
			 
			
			
			 
			
			
			26.5
			
			
			 
			
			
			 
			
		

Source: Bloomberg &amp; StockFacts (data as of 25 January 2019)

P/B ratios are one of the valuation metrics used to value the MOE Sector, especially when earnings may be depressed or negative, which could result in abnormal or unavailable price-to-earnings (P/E) ratios. Aside from analysts’ expectations and earnings estimates, investors should also look out for other key indicators for the sector, such as order book momentum, positive operating cash flows, and balance sheet strength.

Gradual Sector Recovery 

Analysts have noted that although the worst appears to be over for Singapore shipyards, the industry recovery remains protracted.

“The overall conventional shipping market is expected to remain on a recovery path, albeit gradual. Global order book-to-fleet ratio has dropped to a low of less than 10%, implying moderating new supply going forward,” DBS Research noted in a sector strategy report published on 26 November 2018.

On the scrapping side, the new Ballast Water Management Convention rule with its two-year gestation period – which took effect in September 2017 – should continue to drive demolition of old vessels, but demand growth will still remain slow, given lower global economic growth and continuing trade tensions, the bank said in the report.

“Against this backdrop, we expect shipbuilding consolidation to continue, and the market to improve with a moderate uptick in orders,” the report added.



Rising Crude Prices Lift Singapore’s Largest Shipyard Stocks

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Long Term Returns of Temasek’s Major SGX-listed Investments

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