23 June 2017
Best World, Hanwell & Food Empire Led the Big Consumer Staples Stocks in YTD
  • Singapore’s 20 biggest Consumer Staples stocks have averaged 9% price gains in the 2017 YTD. Last year, the Sector was the strongest segment of the Singapore market, with the same 20 stocks averaging a 35% price return.
  • In the 2017 YTD the three strongest of the 20 Consumer Staples stocks were Best World International, Food Empire Holdings and Hanwell Holdings. Best World generated a 120% price gain, whilst Hanwell and Food Empire generated similar respective gains of 48% and 42%.
  • All three of these stocks reported diluted EPS growth in 1QFY17. Best World reported EPS of 3.53 cents (+62.7% YoY) for 1QFY17, Hanwell reported EPS of 0.15 cents (+36.4% YoY) in 1QFY17, and Food Empire reported EPS of 1.17 US cents (+56.0% YoY) in 1QFY17.

This year the biggest 20 stocks of the Consumer Staples Sector have been relatively muted compared to their strong performance last year. These 20 stocks have averaged a 9% price return in the 2017 year-to-date, which is reduced to 2% if applying a market capitalisation weighted average. In contrast the Consumer Staples segment was the best performer in 2016 year, with the same 20 stocks generating an average 35% price return in 2016, or a 23% return if applying a market capitalisation weighted average.

 

Stocks within the Consumer Staples Sector are mostly focused on food, beverage and other non-durable products and services. This can include plantations to manufacturers and packagers to food retailers. 

 

The Sector is traditionally known as a more defensive than cyclical sector, which may provide a part explanation for its better performance in 2016 when most broad benchmarks were lower. It may also partially explain the relatively  muted performance of the Consumer Staples Sector in the year thus far, when most benchmarks were stronger. However, a caveat to the defensive and cyclical lens, is that the businesses and reach of the Consumer Stocks are anything but uniform and generic. 

 

Sector Outperformers in 2017 YTD

 

So far in the 2017 YTD the three strongest performers of the 20 Consumer Staples stocks were Best World International (“Best World”), Hanwell Holdings (“Hanwell”) and Food Empire Holdings (“Food Empire”). All three stocks operate international consumer-orientated businesses.

 

In the year–to-date, Best World generated a 120% price gain, whilst Hanwell and Food Empire generated similar gains of 48% and 42% respectively.  One factor that distinguished the three that they were amongst a broader group of the stocks that reported diluted EPS growth in 1QFY17. As noted in their respective financial statements:

  • Best World reported diluted EPS of 3.53 cents for 1QFY17, up from 2.17 cents in 1QFY16 (+62.7% YoY);
  • Hanwell reported EPS of 0.15 cents in 1QFY17, up from 0.11 cents in 1QFY16 (+36.4% YoY); and
  • Food Empire reported EPS of 1.17 US cents in 1QFY17, up from 0.75 US cents in 1QFY16 (+56.0% YoY).

 

Name

SGX Code

Market Cap S$M

Price S$

Price Change MTD %

Price Change YTD %

P/E

Dvd Ind Yld %

Thai Beverage

Y92

22,097

0.875

0.0

2.9

22.0

2.8

Wilmar Intl

F34

22,069

3.510

-0.8

-2.2

14.5

1.9

Dairy Farm Intl Hldgs

D01

14,990

11.039

-0.1

6.1

23.0

2.6

Olam Intl

O32

5,396

1.970

-3.9

0.0

16.0

3.0

Golden Agri-Resources

E5H

4,712

0.375

2.7

-12.8

9.9

1.7

Fraser and Neave

F99

3,429

2.390

2.6

14.4

33.6

1.9

First Resources

EB5

3,041

1.895

-3.6

-0.3

13.0

1.6

Sheng Siong Grp

OV8

1,481

0.985

1.5

4.2

23.4

3.8

Bumitama Agri

P8Z

1,313

0.755

0.7

-9.6

12.0

2.0

Delfi

P34

1,228

2.020

-10.6

-9.0

37.8

1.6

Japfa

UD2

1,117

0.635

16.5

-29.8

8.6

1.6

Best World Intl

CGN

807

1.475

-0.3

120.1

23.2

2.0

Yeo Hiap Seng

Y03

753

1.310

-1.5

-1.5

4.6

1.5

QAF

Q01

746

1.325

-2.2

-4.7

6.3

3.8

Indofood Agri Resources

5JS

663

0.470

-4.1

-10.5

10.9

1.4

Del Monte Pacific

D03

632

0.330

1.5

-2.9

11.6

5.5

Mewah Intl Inc

MV4

450

0.300

-1.6

9.1

14.9

3.7

Food Empire Hldgs

F03

357

0.665

-7.6

47.8

15.2

0.9

Sino Grandness Food Industry Grp

T4B

260

0.255

13.3

16.8

3.5

N/A

Hanwell Hldgs

DM0

199

0.340

21.4

41.7

18.6

1.4

Average

 

 

 

1.2

9.0

16.1

2.3

Source: SGX, Bloomberg & SGX StockFacts (data as of 22 June 2017)

 

Comparative Performances and Volatility

 

Relative to the Straits Times Index (STI) the Consumer Staples Sector leaders were less volatile than the more cyclical Consumer Discretionary Sector leaders in both the last six months, and 2016. On a market capitalisation weighted basis, the 20 Consumer Staples stocks tabled above averaged a beta coefficient of 0.68 over the past six months, and a coefficient of 0.73 in 2016.

 

This compared to the same measure for the 20 biggest Consumer Discretionary stocks which was higher at 0.77 over the past six months and higher at 0.84 in 2016. This coefficient is a simple volatility measure of the average percentage price change of the stocks given a 1% change in the STI.

 

The 20 biggest active stocks of the Consumer Discretionary Sector have averaged a 15% price gain in the 2017 year to date.  Within the Consumer Discretionary Sector, the stocks of the Hotels, Restaurant and Leisure industry have performed comparatively strongly in Singapore and across the world in the 2017 YTD. Singapore’s largest capitalised stocks within this industry is STI constituent Genting Singapore which has rallied 25% in the 2017 YTD, and doubled its dividend distribution in FY16 from FY15. As discussed here, within the Consumer Discretionary Sector the 20 largest Hotels, Restaurant and Leisure had rallied 18% in the 2017 year through to 16 June. 


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