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.

Asia’s leading multi-asset exchange

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

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

CapitaLand Ascendas REIT / Equity Bottom-Up

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<li>
Singapore’s REITS with significant Industrial or Logistic property assets have all generated gains in the first five months of 2021. With total returns averaging 12%, two thirds of the nine REITs outpaced the iEdge S-REIT Leaders Index, while the remaining third generated a marginal total return in-line with the Index. 
	 </li>
	<li>
Global container shipping contracting has made a record-breaking start to the year with container ships maintaining an essential role in trade, logistics and supply chain management. Yangzijiang, Samudera Shipping and HPH Trust have averaged a 38% total return over the first five months of 2021.  
	 </li>
	<li>Global Logistics Service stocks have also gained over the five months. Cosco Shipping Int, GKE Corp and A-Sonic generated gains, with Cosco Shipping Int and GKE Corp marginally outpacing the 9% gain by global industry leaders. A-Sonic saw its share price double from 33 cents to 70 cents over the five months, and on 19 May, was granted a further extension to 4 June 2022 to meet the SGX-ST Watch-List exit requirement.    </li>
</ul>
 

Structural Drivers of Regional Trade 
Over the recent years, regional supply chains have been subjected to much restructuring. This is influenced by the rise of the Asian consumer, and developments driving trade growth such as technology, communication and e-commerce. The IMF estimates that two-thirds of the world’s industrial robots are used in Asia, and the share of retail sales taking place online is 1.5 times larger in Asia than in Western Europe or the United States. This report also revealed that IMF modeling suggests that further trade liberalisation and regional integration could lead to a new equilibrium in which Asia’s GDP would be higher by more than 10% over time. 
Amidst the challenges of 2020, trade across Developing Asia saw half the declines observed in global trade value. The total value of trade between China and its partners in Developing Asia has soared by 47% from US$434 billion in 2015 to US$638 billion in 2020. Over these years, the US$204 billion growth in China’s trade to Developing Asia, more than offset the US$55 billion decline in trade to the United States, and structurally poised Developing Asia as a larger of the two trading partners. Within Asia, the value of trade between China and its ASEAN partners from 2015 to 2020 has soared. Comparing the trade value levels of China and its ASEAN partners between January 2016 and January 2021 shows approximate growth rates of 140% with Vietnam, 90% with Indonesia, 90% with Malaysia, 60% with the Philippines, 60% with Thailand and 50% with Singapore. The 2020 World Trade Statistical Review has revealed that among the world’s top 50 traders, Vietnam and the Philippines rose the most in world rankings for merchandise trade over the past 10 years, due to their active participation in global value chains. Industrial &amp; Logistics Property REITs 
Singapore’s REITS with significant Industrial and/or logistic property assets have all generated gains in the first five months of 2021. With total returns averaging 12%, two thirds of the nine REITs outpaced the iEdge S-REIT Leaders Index, while the remaining third gained in-line with the Index. 
As <a href="https://www.sgx.com/securities/equities/O5RU">AIMS APAC REIT</a> noted in May, over half of the REIT’s tenants by gross rental income, operate in the logistics and warehouse space, which has been well supported by structural demand drivers. In its 4Q FY21 (ended 31 Mar) the manager of AIMS APAC REIT successfully executed 37 new and renewal leases representing 103,965 sqm or 14.0% of total net lettable area. The Manager also noted the high occupancy is expected to be sustained, as strong demand for logistics and warehouse facilities continue to be underpinned by e-commerce, stockpiling and shifts in supply chains. <a href="https://www.sgx.com/securities/equities/K2LU">ARA LOGOS Logistics Trust</a> noted its 1Q21 YoY revenue growth was due to the commencement of new leases at several properties as well as higher revenue generated from the Australia portfolio, and the portfolio committed occupancy rose to 99.1%. EC World REIT also maintains a 99.1% occupancy rate across its eight logistics and e-commerce focused properties, and noted total retail sales in China for the first four months of 2021 increased 29.6% YoY, of which, online retail sales of physical goods increased 27.6% YoY. 
Over the first five months of 2021, <a href="https://www.sgx.com/securities/equities/BWCU">EC World REIT</a> has generated a 14% total return while ARA LOGOS Logistics generated a 36% total return. The portfolio occupancy of <a href="https://www.sgx.com/securities/equities/M44U">Mapletree Logistic Trust</a> stood at 97.5% as of 31 March, with the FY20/21 (ended 31 Mar) seeing the portfolio acquired 18 well-located modern logistics facilities in China, Vietnam, Australia, Japan, and South Korea and India, as well as the remaining 50% interest in 15 properties in China with a total value of S$1.6 billion. While Mapletree Logistics Trust gained 1% over the first five months of 2021, this followed a 20% total return in 2020. 
The table below details the performances of REITs with a significant amount of industrial and/or logistic properties.

<ul>
<li>Note as of 31 March, the portfolio AUM of <a href="https://www.sgx.com/securities/equities/BUOU">Frasers Logistics &amp; Commercial Trust</a> was comprised of 58% logistic and industrial properties (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/KNMKL5NRX89NX6I1/38728366f7f2e475560af370bbdf2510a6d5ad802da1f12e7dc0bc3a49026eba">here</a> for more) while 39% of the portfolio AUM of <a href="https://www.sgx.com/securities/equities/ME8U">Mapletree Industrial Trust</a> was comprised of non-Data Centre and non-Hi-Tech Buildings (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/F7MRGH8R5C4LW8YH/f7c1c7680c0d1e21111a34a2bcf261c61e07e54f0543cfc5a57fe71f76f33051">here</a> for more).</li>
	<li>The table does not include <a href="https://www.sgx.com/securities/equities/CWBU">Cromwell European REIT</a> which announced last month that its pivot towards the logistics sector has accelerated this year with strategic acquisitions in two new markets (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/IO58F75UK8Z3W94O/16c53d6941212291ff9a7101825aefe9a63202a7653476db694748ed2bccfd7f">here</a> for more).</li>
</ul>
<table class="table table-striped"><tbody>
<tr>
<td>
			Industrial/Logistics REITs
			</td>
			<td>
			Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			5M21 Total Return %
			</td>
			<td>
			3Y Total Return %
			</td>
			<td>
			10Y Total Return %
			</td>
			<td>
			P/B 
			</td>
			<td>
			P/B End of 2020
			</td>
			<td>
			P/B End of 2019
			</td>
			<td>
			Net Insti &amp; Net Prop Flow 5M21 S$M
			</td>
		</tr>
<tr>
<td>
			AIMS APAC REIT
			</td>
			<td>
			O5RU
			</td>
			<td>
			996
			</td>
			<td>
			17
			</td>
			<td>
			26
			</td>
			<td>
			191
			</td>
			<td>
			0.9
			</td>
			<td>
			0.8
			</td>
			<td>
			1.0
			</td>
			<td>
			-0.4
			</td>
		</tr>
<tr>
<td>
			ARA LOGOS Log Tr
			</td>
			<td>
			K2LU
			</td>
			<td>
			1166
			</td>
			<td>
			39
			</td>
			<td>
			29
			</td>
			<td>
			100
			</td>
			<td>
			1.5
			</td>
			<td>
			1.1
			</td>
			<td>
			1.2
			</td>
			<td>
			18.2
			</td>
		</tr>
<tr>
<td>
			Ascendas REIT
			</td>
			<td>
			A17U
			</td>
			<td>
			12174
			</td>
			<td>
			1
			</td>
			<td>
			32
			</td>
			<td>
			162
			</td>
			<td>
			1.3
			</td>
			<td>
			1.3
			</td>
			<td>
			1.4
			</td>
			<td>
			-217.1
			</td>
		</tr>
<tr>
<td>
			EC World REIT
			</td>
			<td>
			BWCU
			</td>
			<td>
			645
			</td>
			<td>
			14
			</td>
			<td>
			38
			</td>
			<td>
			N/A
			</td>
			<td>
			0.9
			</td>
			<td>
			0.8
			</td>
			<td>
			0.9
			</td>
			<td>
			1.2
			</td>
		</tr>
<tr>
<td>
			ESR-REIT
			</td>
			<td>
			J91U
			</td>
			<td>
			1546
			</td>
			<td>
			7
			</td>
			<td>
			0
			</td>
			<td>
			72
			</td>
			<td>
			1.0
			</td>
			<td>
			1.0
			</td>
			<td>
			1.2
			</td>
			<td>
			-20.3
			</td>
		</tr>
<tr>
<td>
			Frasers L&amp;C Tr
			</td>
			<td>
			BUOU
			</td>
			<td>
			4903
			</td>
			<td>
			4
			</td>
			<td>
			61
			</td>
			<td>
			N/A
			</td>
			<td>
			1.3
			</td>
			<td>
			1.3
			</td>
			<td>
			1.3
			</td>
			<td>
			-24.1
			</td>
		</tr>
<tr>
<td>
			Mapletree Ind Tr
			</td>
			<td>
			ME8U
			</td>
			<td>
			6678
			</td>
			<td>
			1
			</td>
			<td>
			69
			</td>
			<td>
			362
			</td>
			<td>
			1.7
			</td>
			<td>
			1.7
			</td>
			<td>
			1.6
			</td>
			<td>
			-121.9
			</td>
		</tr>
<tr>
<td>
			Mapletree Log Tr
			</td>
			<td>
			M44U
			</td>
			<td>
			8524
			</td>
			<td>
			1
			</td>
			<td>
			86
			</td>
			<td>
			303
			</td>
			<td>
			1.5
			</td>
			<td>
			1.6
			</td>
			<td>
			1.5
			</td>
			<td>
			-41.6
			</td>
		</tr>
<tr>
<td>
			Sabana REIT
			</td>
			<td>
			M1GU
			</td>
			<td>
			448
			</td>
			<td>
			27
			</td>
			<td>
			20
			</td>
			<td>
			12
			</td>
			<td>
			0.8
			</td>
			<td>
			0.7
			</td>
			<td>
			0.8
			</td>
			<td>
			2.3
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			12
			</td>
			<td>
			40
			</td>
			<td>
			172
			</td>
			<td>
			1.2
			</td>
			<td>
			1.1
			</td>
			<td>
			1.2
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
 Source: SGX, Refinitiv, Bloomberg (Data as of 31 May 2021) 
 

Recent Surges in Demand for Container Shipping 
Container shipping maintains an essential role in trade, international logistics and supply chain management. On 31 March, the World Trade Organisation estimated that global merchandise trade volume would increase by 8.0% in 2021. Wholesale trade was also a highlight in Singapore’s recent 1Q21 GDP report, with wholesale trade bolstered by a 6.7% increase in foreign wholesale trade sales volume which was in turn a reversal from the 0.5% drop seen in 4Q20. Last week <a href="https://www.bimco.org/news/market_analysis/2021/20210527-container_ships_drive_119_jump_in_total">BIMCO</a> highlighted containership contracting had seen a record-breaking start to the year, with 2.2m TEU ( twenty-foot equivalent unit) being ordered. This is more than 12 times higher than the 184,254 TEU ordered in the first five months of 2020 and more than 60% higher than the previous record dating back to the start of 2005. 
On 29 April, <a href="https://www.sgx.com/securities/equities/BS6">Yangzijiang Shipbuilding Holdings</a> reported an 89% YoY growth in earnings to RMB 761.7 million for 1QFY21 (ended 31 Mar). While the Group revenue declined 25% YoY, gross profit the Group’s gross margin improved 11 percentage points to 31% in 1QFY21, underpinned by the construction of more containerships and larger-sized vessels, and improved charter rates. In the 2021 year to date, the Group has secured new orders for 75 vessels (incl. 51 containerships) with a total contract value of US$4.0 billion (containerships making up US$3.4 billion), its largest order wins since 2008. Yangzijiang Shipbuilding Holdings has seen its price gain 57.1% over the first five months of 2021, with dividends boosting the total return to 61.8%. The stock was also recipient to S$258 million in net institutional and net proprietary inflows over the five months. <a href="https://www.sgx.com/securities/equities/S56">Samudera Shipping Line</a> generated a 24% price gain over the same five months, boosting the total return to 28.2%. The Group noted that in FY20 (ended 31 Dec), its container volume handled for FY20 recorded a healthy 7.5% increase to 1,3 million TEUs, from 1.2 million TEUs in FY19, driven by a sharp turnaround in container shipping activity in the second half of the year (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/EGHQ5IFAE33LRKOR/efb0a4e9c6b18e05b1cf6fac8aaec48b9f5d46f9155ceb06cf2c2d16e2d2902c">here</a> for more). The Group also observed that it is also on the lookout for investment opportunities in land-side logistics to expand its income stream for greater sustainability, while remaining prudent amid the ongoing pandemic. Samudera Shipping Line also noted that by the end of 2020, just one year from commencement of the business, its logistics services had doubled in fleet size and volume. 
Back at the 19 April AGM, the <a href="https://www.sgx.com/securities/equities/NS8U">Hutchison Port Holdings Trust</a> (“HPH Trust”) Chairman noted the upsurge in export volume from China in 4Q20, continued into 1Q21. Based on shipping and market information received the volume would not be expected to drop in 2021. Meanwhile the HPH Trust CEO noted that other than cementing the current US export position, the Yantian International Container Terminals would diversify to build on the increasing imports trend, tap into e-commerce market and develop non-US markets. Logistic Services Stocks Resilient in 2021 YTD 
The largest capitalised global logistical services stocks were relatively resilient in 2020, averaging 9% gains. Industry momentum overt the first five months of 2021 more than doubled, with the same stocks again averaging 9% gains. Recent years have seen the premium commanded by the industry leaders gradually build, partially recovering from sector-wide downward re-rating in 2018 attributed to trade tensions. Since the end of 2018, the median premium to book value for the global industry leaders has advanced from 70% to 110%. Since the end of 2018, APAC’s largest capitalised global logistical services stocks have trailed global peers in terms of the premium rebound to book value, while generating similar market returns. 
In Singapore, <a href="https://www.sgx.com/securities/equities/F83">Cosco Shipping International</a> and Catalist-listed <a href="https://www.sgx.com/securities/equities/595">GKE Corporation</a> have both generated a 12.5% gain in the 2021 year-to-date, following mixed performances in 2020. The latter stock is now trading at a 25% premium to book value, from a 35% discount to book value at the end of 2018. For its 1HFY21 (ended 30 Nov) GKE Corporation achieved a record net profit of S$6.5 million, tripling its 1HFY20 net profit, with a 9.2% increase in revenue to S$60.1 million (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/7C2LRLXLWC8OEOLG/296d8217091e57c85bd6e107065e5c215cbe4b2278fdac4fcaa966adb6d09317">here</a> for more). GKE Corporation maintains its current warehouses’ operate at optimal occupancy, with secured longer-term contracts with its customers providing stable earnings visibility. The company also noted that some customer stockpiling in preparation to avoid operational disruptions has led to an increase in warehouse occupancy, with the higher demand against limited warehouse space resulting in optimal utilisation and better rental rates. <a href="https://www.sgx.com/securities/equities/BTJ">A-Sonic Aerospace</a> noted the resilience of its portfolio of logistics activities last year was in part due to its essential services to its customers who are engaged in the global supply chain. A-Sonic Aerospace has continued in its resolve to streamline its logistics business, furthering to solidify foundations, with the Group centering its efforts on two overarching strategies. This encouraged all member entities in its logistics network to seek to operate efficiently, effectively and productively, while the Group leverages on qualitative sources of growth with investments in technology and business productivity. For its FY20 (ended 31 Dec), the company reported net profit of US$6.33 million, up 150% from US$2.53 million in FY19 (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/HDA2VMVZS1YRW1AP/6d9bf1bbda1d60c72464c594e5f1b67dbffc268e1afdda5fcfe38f6cdc964002">here</a> for more). On 19 May, A-Sonic Aerospace was granted approval to a further extension application of the cure period to 4 June 2022 to meet the SGX-ST Watch-List exit requirement (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/8RYGTVHCE5PVLFDE/834ff033f030762d1e42de109f314d8c453fb762cb6492d06f006efa117448ee">here</a> for more details), as noted in its recent quarterly updates, the company maintains it remains on the SGX Watch-List solely because it had not achieved an average daily market capitalisation of S$40 million.
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Singapore’s REITS with significant Industrial or Logistic property assets have all generated gains in the first five months of 2021. With total returns averaging 12%, two thirds of the nine REITs outpaced the iEdge S-REIT Leaders Index, while the remaining third generated a marginal total return in-line with the Index. 
	 
	
Global container shipping contracting has made a record-breaking start to the year with container ships maintaining an essential role in trade, logistics and supply chain management. Yangzijiang, Samudera Shipping and HPH Trust have averaged a 38% total return over the first five months of 2021.   
	 
	Global Logistics Service stocks have also gained over the five months. Cosco Shipping Int, GKE Corp and A-Sonic generated gains, with Cosco Shipping Int and GKE Corp marginally outpacing the 9% gain by global industry leaders. A-Sonic saw its share price double from 33 cents to 70 cents over the five months, and on 19 May, was granted a further extension to 4 June 2022 to meet the SGX-ST Watch-List exit requirement.    

 

Structural Drivers of Regional Trade  
Over the recent years, regional supply chains have been subjected to much restructuring. This is influenced by the rise of the Asian consumer, and developments driving trade growth such as technology, communication and e-commerce. The IMF estimates that two-thirds of the world’s industrial robots are used in Asia, and the share of retail sales taking place online is 1.5 times larger in Asia than in Western Europe or the United States. This report also revealed that IMF modeling suggests that further trade liberalisation and regional integration could lead to a new equilibrium in which Asia’s GDP would be higher by more than 10% over time.  
Amidst the challenges of 2020, trade across Developing Asia saw half the declines observed in global trade value. The total value of trade between China and its partners in Developing Asia has soared by 47% from US$434 billion in 2015 to US$638 billion in 2020. Over these years, the US$204 billion growth in China’s trade to Developing Asia, more than offset the US$55 billion decline in trade to the United States, and structurally poised Developing Asia as a larger of the two trading partners. Within Asia, the value of trade between China and its ASEAN partners from 2015 to 2020 has soared. Comparing the trade value levels of China and its ASEAN partners between January 2016 and January 2021 shows approximate growth rates of 140% with Vietnam, 90% with Indonesia, 90% with Malaysia, 60% with the Philippines, 60% with Thailand and 50% with Singapore. The 2020 World Trade Statistical Review has revealed that among the world’s top 50 traders, Vietnam and the Philippines rose the most in world rankings for merchandise trade over the past 10 years, due to their active participation in global value chains.   Industrial &amp; Logistics Property REITs  
Singapore’s REITS with significant Industrial and/or logistic property assets have all generated gains in the first five months of 2021. With total returns averaging 12%, two thirds of the nine REITs outpaced the iEdge S-REIT Leaders Index, while the remaining third gained in-line with the Index.   
As AIMS APAC REIT noted in May, over half of the REIT’s tenants by gross rental income, operate in the logistics and warehouse space, which has been well supported by structural demand drivers. In its 4Q FY21 (ended 31 Mar) the manager of AIMS APAC REIT successfully executed 37 new and renewal leases representing 103,965 sqm or 14.0% of total net lettable area. The Manager also noted the high occupancy is expected to be sustained, as strong demand for logistics and warehouse facilities continue to be underpinned by e-commerce, stockpiling and shifts in supply chains.  ARA LOGOS Logistics Trust noted its 1Q21 YoY revenue growth was due to the commencement of new leases at several properties as well as higher revenue generated from the Australia portfolio, and the portfolio committed occupancy rose to 99.1%. EC World REIT also maintains a 99.1% occupancy rate across its eight logistics and e-commerce focused properties, and noted total retail sales in China for the first four months of 2021 increased 29.6% YoY, of which, online retail sales of physical goods increased 27.6% YoY.  
Over the first five months of 2021, EC World REIT has generated a 14% total return while ARA LOGOS Logistics generated a 36% total return. The portfolio occupancy of Mapletree Logistic Trust stood at 97.5% as of 31 March, with the FY20/21 (ended 31 Mar) seeing the portfolio acquired 18 well-located modern logistics facilities in China, Vietnam, Australia, Japan, and South Korea and India, as well as the remaining 50% interest in 15 properties in China with a total value of S$1.6 billion. While Mapletree Logistics Trust gained 1% over the first five months of 2021, this followed a 20% total return in 2020.  
The table below details the performances of REITs with a significant amount of industrial and/or logistic properties.


Note as of 31 March, the portfolio AUM of Frasers Logistics &amp; Commercial Trust was comprised of 58% logistic and industrial properties (click here for more) while 39% of the portfolio AUM of Mapletree Industrial Trust was comprised of non-Data Centre and non-Hi-Tech Buildings (click here for more).
	The table does not include Cromwell European REIT which announced last month that its pivot towards the logistics sector has accelerated this year with strategic acquisitions in two new markets (click here for more).




			Industrial/Logistics REITs
			
			
			Code
			
			
			Mkt Cap S$M
			
			
			5M21 Total Return %
			
			
			3Y Total Return %
			
			
			10Y Total Return %
			
			
			P/B 
			
			
			P/B End of 2020
			
			
			P/B End of 2019
			
			
			Net Insti &amp; Net Prop Flow 5M21 S$M
			
		


			AIMS APAC REIT
			
			
			O5RU
			
			
			996
			
			
			17
			
			
			26
			
			
			191
			
			
			0.9
			
			
			0.8
			
			
			1.0
			
			
			-0.4
			
		


			ARA LOGOS Log Tr
			
			
			K2LU
			
			
			1166
			
			
			39
			
			
			29
			
			
			100
			
			
			1.5
			
			
			1.1
			
			
			1.2
			
			
			18.2
			
		


			Ascendas REIT
			
			
			A17U
			
			
			12174
			
			
			1
			
			
			32
			
			
			162
			
			
			1.3
			
			
			1.3
			
			
			1.4
			
			
			-217.1
			
		


			EC World REIT
			
			
			BWCU
			
			
			645
			
			
			14
			
			
			38
			
			
			N/A
			
			
			0.9
			
			
			0.8
			
			
			0.9
			
			
			1.2
			
		


			ESR-REIT
			
			
			J91U
			
			
			1546
			
			
			7
			
			
			0
			
			
			72
			
			
			1.0
			
			
			1.0
			
			
			1.2
			
			
			-20.3
			
		


			Frasers L&amp;C Tr
			
			
			BUOU
			
			
			4903
			
			
			4
			
			
			61
			
			
			N/A
			
			
			1.3
			
			
			1.3
			
			
			1.3
			
			
			-24.1
			
		


			Mapletree Ind Tr
			
			
			ME8U
			
			
			6678
			
			
			1
			
			
			69
			
			
			362
			
			
			1.7
			
			
			1.7
			
			
			1.6
			
			
			-121.9
			
		


			Mapletree Log Tr
			
			
			M44U
			
			
			8524
			
			
			1
			
			
			86
			
			
			303
			
			
			1.5
			
			
			1.6
			
			
			1.5
			
			
			-41.6
			
		


			Sabana REIT
			
			
			M1GU
			
			
			448
			
			
			27
			
			
			20
			
			
			12
			
			
			0.8
			
			
			0.7
			
			
			0.8
			
			
			2.3
			
		


			Average
			
			
			 
			
			
			 
			
			
			12
			
			
			40
			
			
			172
			
			
			1.2
			
			
			1.1
			
			
			1.2
			
			
			 
			
		

 Source: SGX, Refinitiv, Bloomberg (Data as of 31 May 2021)  
 

Recent Surges in Demand for Container Shipping  
Container shipping maintains an essential role in trade, international logistics and supply chain management. On 31 March, the World Trade Organisation estimated that global merchandise trade volume would increase by 8.0% in 2021. Wholesale trade was also a highlight in Singapore’s recent 1Q21 GDP report, with wholesale trade bolstered by a 6.7% increase in foreign wholesale trade sales volume which was in turn a reversal from the 0.5% drop seen in 4Q20. Last week BIMCO highlighted containership contracting had seen a record-breaking start to the year, with 2.2m TEU ( twenty-foot equivalent unit) being ordered. This is more than 12 times higher than the 184,254 TEU ordered in the first five months of 2020 and more than 60% higher than the previous record dating back to the start of 2005.  
On 29 April, Yangzijiang Shipbuilding Holdings reported an 89% YoY growth in earnings to RMB 761.7 million for 1QFY21 (ended 31 Mar). While the Group revenue declined 25% YoY, gross profit the Group’s gross margin improved 11 percentage points to 31% in 1QFY21, underpinned by the construction of more containerships and larger-sized vessels, and improved charter rates. In the 2021 year to date, the Group has secured new orders for 75 vessels (incl. 51 containerships) with a total contract value of US$4.0 billion (containerships making up US$3.4 billion), its largest order wins since 2008. Yangzijiang Shipbuilding Holdings has seen its price gain 57.1% over the first five months of 2021, with dividends boosting the total return to 61.8%. The stock was also recipient to S$258 million in net institutional and net proprietary inflows over the five months.  Samudera Shipping Line generated a 24% price gain over the same five months, boosting the total return to 28.2%. The Group noted that in FY20 (ended 31 Dec), its container volume handled for FY20 recorded a healthy 7.5% increase to 1,3 million TEUs, from 1.2 million TEUs in FY19, driven by a sharp turnaround in container shipping activity in the second half of the year (click here for more). The Group also observed that it is also on the lookout for investment opportunities in land-side logistics to expand its income stream for greater sustainability, while remaining prudent amid the ongoing pandemic. Samudera Shipping Line also noted that by the end of 2020, just one year from commencement of the business, its logistics services had doubled in fleet size and volume.  
Back at the 19 April AGM, the Hutchison Port Holdings Trust (“HPH Trust”) Chairman noted the upsurge in export volume from China in 4Q20, continued into 1Q21. Based on shipping and market information received the volume would not be expected to drop in 2021. Meanwhile the HPH Trust CEO noted that other than cementing the current US export position, the Yantian International Container Terminals would diversify to build on the increasing imports trend, tap into e-commerce market and develop non-US markets.  Logistic Services Stocks Resilient in 2021 YTD  
The largest capitalised global logistical services stocks were relatively resilient in 2020, averaging 9% gains. Industry momentum overt the first five months of 2021 more than doubled, with the same stocks again averaging 9% gains. Recent years have seen the premium commanded by the industry leaders gradually build, partially recovering from sector-wide downward re-rating in 2018 attributed to trade tensions. Since the end of 2018, the median premium to book value for the global industry leaders has advanced from 70% to 110%. Since the end of 2018, APAC’s largest capitalised global logistical services stocks have trailed global peers in terms of the premium rebound to book value, while generating similar market returns.  
In Singapore, Cosco Shipping International and Catalist-listed GKE Corporation have both generated a 12.5% gain in the 2021 year-to-date, following mixed performances in 2020. The latter stock is now trading at a 25% premium to book value, from a 35% discount to book value at the end of 2018. For its 1HFY21 (ended 30 Nov) GKE Corporation achieved a record net profit of S$6.5 million, tripling its 1HFY20 net profit, with a 9.2% increase in revenue to S$60.1 million (click here for more). GKE Corporation maintains its current warehouses’ operate at optimal occupancy, with secured longer-term contracts with its customers providing stable earnings visibility. The company also noted that some customer stockpiling in preparation to avoid operational disruptions has led to an increase in warehouse occupancy, with the higher demand against limited warehouse space resulting in optimal utilisation and better rental rates.  A-Sonic Aerospace noted the resilience of its portfolio of logistics activities last year was in part due to its essential services to its customers who are engaged in the global supply chain. A-Sonic Aerospace has continued in its resolve to streamline its logistics business, furthering to solidify foundations, with the Group centering its efforts on two overarching strategies. This encouraged all member entities in its logistics network to seek to operate efficiently, effectively and productively, while the Group leverages on qualitative sources of growth with investments in technology and business productivity. For its FY20 (ended 31 Dec), the company reported net profit of US$6.33 million, up 150% from US$2.53 million in FY19 (click here for more). On 19 May, A-Sonic Aerospace was granted approval to a further extension application of the cure period to 4 June 2022 to meet the SGX-ST Watch-List exit requirement (click here for more details), as noted in its recent quarterly updates, the company maintains it remains on the SGX Watch-List solely because it had not achieved an average daily market capitalisation of S$40 million.



Frasers Logistics & Commercial Trust (FLT SP)

Trade & Logistics Make a Mark in First Five Months of 2021   