|17 January 2017|
|Recent Resilience of the Capital Goods Industry|
While stocks categorised to the Capital Goods Industry span a wide range of business activities, they are generally involved in the manufacturing or distribution of goods. Across Asia Pacific, the biggest stocks of the Capital Goods Industry generated stronger 12 month average returns than the other two types of Industrial stocks, Transportation and Commercial and Professional Services.
Globally, Capital Goods stocks maintain similar valuations and dividend yields to the global standard as represented by the MSCI World Index benchmark. However, operating margins for the Capital Goods segment have been lower than the global benchmark over the recent 12 months. At the same time the value of all trade across the world was reported to be 1% lower in the first eight months of 2016.
As one of the most trade-dependent and externally responsive economies in the world, Singapore’s total value of exports and imports also declined 1% over the eight months. On a positive note, Singapore’s non-oil domestic exports expanded 9.4% year-on-year (YoY) in December (higher than Bloomberg’s economists survey median of +5.8%), following on from 11.5% YoY growth in November after October’s contraction of 12.0% YoY.
Industrials & Capital Goods Sector Leader - Jardine Matheson Holdings
Jardine Matheson Holdings is the third biggest Capital Good stock listed across Asia Pacific. Over the past 12 months Jardine Matheson Holdings gained 15.7%, with 2016 turnover 70.6% higher than the previous year. Asia Pacific’s two biggest Capital Goods stocks, CK Hutchison Holdings and CITIC have averaged a 1.0% gain in the year thus far, taking their average 12 month total return to a decline of -1.5% in SGD terms.
Jardine Matheson Holdings has an 83% stake in Jardine Strategic Holdings, which is also an industrial conglomerate. Jardine Strategic Holdings is the fourth biggest Capital Goods stock in Asia Pacific and its share price rallied 36.9% over the past 12 months, with a similar 42.8% increase in turnover. As noted in the My Gateway Report published yesterday (click here) in November, Jardine Matheson Holdings reported interim management statement results for the third quarter ending 30 September, noting that with mixed trading conditions continuing throughout the period under review, underlying earnings were little changed from last year. For the first six months of 2016, Jardine Matheson Holdings underlying profit for the first six months of 2016 was US$636 million, 4% below the same period in 2015.
Exemplifying the diversity of the Capital Goods industry, Jardine Matheson Holdings is active in the fields of motor vehicles and related operations, property investment and development, food retailing, home furnishings, engineering and construction, transport services, insurance broking, restaurants, luxury hotels, financial services, heavy equipment, mining and agribusiness.
Singapore’s 20 Largest Capitalised Capital Goods
Singapore’s 20 largest capitalised Capital Goods stocks includes companies within the Industries of aerospace & defence, construction & engineering, construction machinery & heavy trucks, industrial conglomerates, industrial machinery, in addition to trading companies & distributors. The 20 Capital Goods stocks that are the largest by market capitalisation in Singapore have averaged a 5.5% gain in the year thus far, taking their 12 month average total return to 18.6%.
The 20 Capital Goods stocks that are the largest by market capitalisation in Singapore are tabled below. The majority of Singapore’s 20 biggest Capital Goods stocks have business activities that span across Asia.
ource: SGX, Bloomberg & SGX StockFacts (data as of 16 January 2017) *note stock is currently suspended from trading.
Samurai 2K Aerosol Limited’s Initial Public Offering (IPO) on SGX’s Catalist
Yesterday Samurai 2K Aerosol debuted on Catalist with its shares closing at 24.5 cents, a 4.5 cent gain from the 20.0 cent initial offer price. Samurai 2K Aerosol, headquartered in Malaysia, is a high performance aerosol coating specialist for the automotive refinishing and refurbishing industry. The company manufactures, distributes and markets its products under its own brands to ASEAN customers. Based off the company’s prospectus, the company sold 14.3 million aerosol cans in Malaysia for the whole of 2015, representing a 27% market share.
In Indonesia, the company sold 58.0 million aerosol cans, representing a 5% market share. According to the company, management believes they are well-positioned in their end-user market segments across the Southeast Asian countries.
Specifically, the company believes that the number of two-wheelers in selected Southeast Asian countries are expected to grow from 2015’s 177 million units to 2020’s 239m units, representing a CAGR of 6.2%.
The Aerosol spray paint market is also expected to benefit and grow at a CAGR of 6.2% from 117.5 million cans in 2015 to 158.8 million cans forecast in 2020.
Business strategies and future plans for the company includes:
1) Expanding production facilities and capabilities;
2) Focusing on R&D to increase range of innovative products;
3) Increasing branding and marketing activities to strengthen market position; and
4) Expanding business through acquisitions, joint ventures or strategic alliances.
The stock is yet to be categorised to a Sector and Industry by GICS®. More details on the company can be found in SGX StockFacts here.
|My Gateway & SGX StockFacts|
SGX’s investor education portal with market, product and investment information and events. Sign up now at sgx.com/mygateway to receive our investment updates and economic calendar.
Whether you are seeking new or established companies to invest in, SGX StockFacts can provide you with the information you need to identify and understand the stocks that best fit your investment strategy. Visit now at sgx.com/stockfacts.
This document has been published for general circulation only. It is not an offer or solicitation to buy or sell, nor financial advice or recommendation in relation to, any investment product. Advice should be sought from a financial adviser regarding the suitability of any investment product before investing or adopting any investment strategies. While SGX has taken reasonable care to ensure the accuracy and completeness of the information provided in this document, it will not be liable for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind) suffered due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information. The information in this document is subject to change without notice.