05 June 2018
Three Largest, Best-Performing Consumer Stocks Avg 7% Return in May
  • In the month of May, Consumer Discretionary, which comprises a total of 95 stocks, was the best-performing sector on SGX, generating a market capitalisation-weighted average return of 3.1% during the month.
  • The 10 largest, actively traded Consumer Discretionary stocks on SGX have a combined market capitalisation of more than S$60 billion, and have generated an average total return of 1.9% over the month.
  • The three best-performing stocks among the 10 during the month were: Mandarin Oriental (+9.6%), Genting Singapore (+7.7%) and Shangri-La Asia (+4.0%). These three stocks averaged a total return of 7.1% in May, bringing their total return over the first five months of 2018 to 6.7%.

In the month of May, Consumer Discretionary, which comprises a total of 95 stocks, was the best-performing sector on SGX, generating a market capitalisation-weighted average return of 3.1% during the month, trimming its decline over the first five months of 2018 to 3.9%. For a Market Update published today on May’s sector performances, click here. 

Spotlight on Hotel, Resort & Cruise Line Plays

 

The 10 largest, actively traded Consumer Discretionary stocks on SGX have a combined market capitalisation of more than S$60 billion, and have generated an average total return of 1.9% during the month of May.

 

Of the 10 stocks, five are categorised by the Global Industry Classification Standards (GICS®) as belonging to the Hotels, Resorts & Cruise Lines sub-industry. The remaining five are each classified to the following sub-segments – Auto Distributor, Casinos & Gaming, Movies & Entertainment, Publishing and Department Stores.

 

The three best-performing stocks among the 10 in the month of May were: hotel chain operators Mandarin Oriental (+9.6%) and Shangri-La Asia (+4.0%), as well as casino, gaming and resorts operator Genting Singapore (+7.7%). These three stocks averaged a total return of 7.1% during the month, bringing their total return over the first five months of 2018 to 6.7%, following an average total return of 65.9% in 2017.

 

Improved Global Outlook Bodes Well

 

The improved global economic outlook this year has contributed to improvement in the Consumer Discretionary sector. According to the International Monetary Fund (IMF), worldwide growth is expected to edge higher to 3.9% in 2018 and 2019, from 3.8% in 2017. This momentum is supported by accommodative financial conditions, as well as the domestic and international repercussions of expansionary fiscal policy in the US, it said in its World Economic Outlook report published in April 2018. 

The Singapore economy grew 4.4% YoY in the three months of 2018, higher than the 3.6% expansion in the previous quarter. On a QoQ, seasonally-adjusted annualised basis, the economy expanded by 1.7%, moderating from 2.1% growth in the preceding quarter. This robust showing prompted the government to narrow its 2018 growth forecast to 2.5%-3.5%, from an earlier range of 1.5%-3.5%. For the full release, click here.

 

The momentum appears to have continued in April, with Singapore’s manufacturing output expanding by 9.1%, above economists' expectations of 8%, and beating March's revised growth of 6.1%, data from the Economic Development Board (EDB) showed last week. The growth spanned all manufacturing clusters, with chemicals leading the pack at 12.4%, and electronics at 11.3%. For the full release, click here.

The table below details the 10 largest Consumer Discretionary stocks, sorted by market capitalisation. Click on the stock name to view its full profile in StockFacts.

 

Name

SGX Code

Market Cap S$M

Last Price

Total Return 1M %

Total Return YTD %

P/E (x)

Dvd Ind Yld %

GICS Sub Ind

Genting Singapore 

G13

16,133

1.25

7.7

-2.9

23.6

2.8

Casinos & Gaming

Jardine Cycle & Carriage 

C07

16,189

34.43

3.1

-13.0

14.0

3.3

Distributors

Shangri-La Asia 

S07

10,909

16.00

4.0

-8.7

NA

1.1

Hotels, Resorts & Cruise Lines

Alibaba Pictures Group 

S91

5,177

1.07

NA

-9.9

NA

NA

Movies & Entertainment

Mandarin Oriental Intl 

M04

3,681

2.51

9.6

25.2

57.7

1.2

Hotels, Resorts & Cruise Lines

Singapore Press Holdings

T39

4,348

2.68

-3.3

3.4

12.6

3.4

Publishing

Hotel Properties 

H15

1,998

3.74

-0.3

-2.1

7.3

1.1

Hotels, Resorts & Cruise Lines

Hotel Grand Central 

H18

980

1.57

0.0

9.8

28.6

3.2

Hotels, Resorts & Cruise Lines

GL Ltd

B16

1,211

0.78

-2.5

-7.1

9.4

2.8

Hotels, Resorts & Cruise Lines

Metro Holdings 

M01

981

1.15

-0.9

1.8

6.1

1.7

Department Stores

*Last price of companies are denoted in their respective trading currencies. SGD equivalents are shown in table.

Source: SGX StockFacts & Bloomberg; Data as of 1 June 2018.

 

Earnings Highlights of Three Largest, Best-Performing Consumer Discretionary Stocks

 

Mandarin Oriental – In its interim management statement for the first quarter of 2018, Mandarin Oriental said it saw improved performance for the majority of the hotels in the Group’s portfolio versus the same period in 2017.  In particular, the two wholly owned properties in Hong Kong performed better, as well as the hotels in Singapore, Bangkok and Tokyo. Results in Washington D.C., however, were notably lower than the equivalent period last year when the Presidential Inauguration was held.

 

The Group has announced three new management contracts so far this year – a beachfront resort in Viña del Mar in Chile and a standalone branded Residences by Mandarin Oriental in Barcelona are both expected to open in 2020, while a resort and branded residences in Muscat is expected to open in 2021.

 

A member of the Jardine Matheson Group, Mandarin Oriental operates 31 hotels and eight residences in 21 countries and territories. The Group is incorporated in Bermuda and has a primary listing on the London Stock Exchange, with secondary listings in Bermuda and Singapore.

 

For the full financial statement, click here.

 

Shangri-La AsiaFor the year ended 31 December 2017, Shangri-La Asia reported a consolidated profit attributable to equity holders of the company of US$158.0 million, up 48.9% YoY, while consolidated sales rose 6.5% YoY to US$2.2 billion. Shangri-La said the higher sales was mainly driven by the opening of new hotels during the year and the improvement in room yields.

 

Looking ahead, Shangri-La said that if current operating conditions remain steady, it expects to see continued improvement this year. The five hotels that opened in China last year are expected to create a carry-over impact into 2018 revenue, while its Sri Lanka hotels and the Kerry Hotel in Hong Kong are expected to ramp up this year. Singapore will also see an improved performance, following a full-year of operation of Shangri-La Hotel, Singapore’s Tower Wing, which reopened in May 2017 after a major renovation.

 

Shangri-La Asia, which owns and/or operates hotels and resorts across Asia Pacific, Europe, North America and the Middle East, is primary-listed on the Hong Kong Stock Exchange and secondary-listed on SGX. Its principal activities include the ownership and operation of hotels and associated properties and the provision of hotel management and related services. 

 

For the full financial statement, click here.

 

Genting Singapore For the first quarter ended 31 March 2018, Genting Singapore reported a net profit of S$217.2 million, up 3% YoY, while revenue jumped 15% to S$675.1 million, largely driven by healthy growth in volumes across all major business segments.

 

The ongoing strategy to focus on affluent regional business proved to be effective. The Lunar New Year period saw bustling VIP rolling volume, and the non-gaming business recorded a 10% jump in revenue, with daily average visitation exceeding 18,000 across the attractions. The Group is also making progress on the establishment of Integrated Resorts (IRs) in Japan. The IR Implementation Bill has been submitted on 27 April to the Japan Diet for debate, and the Group is actively preparing for the ensuing bidding exercise by the respective government authorities.

 

Genting Singapore was listed on the Mainboard of Singapore Exchange in December 2005. It has developed gaming and integrated resorts in Australia, the Bahamas, Malaysia, the Philippines, Singapore and the UK. It is best known for its award-winning flagship project, Resorts World™ Sentosa in Singapore, which is one of the largest fully integrated destination resorts in Southeast Asia. 

 

For the full financial results, click here.

 

Did You Know?

 

Consumer discretionary refers to goods and services that are considered non-essential by consumers, but desirable if their available income is sufficient to purchase them. This is influenced by prevailing economic conditions, which directly affects consumer confidence.


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