Tech Sector Leads Global Stocks in 3Q22-to-date, AEM Beats & RaisesAuthor: SGX
Global technology stocks, in addition to e-commerce retailers make up approximately 25% of the FTSE Developed Index, with the slump in these industries in 1Q22 and 2Q22 driving the decline of the broader Developed economy benchmark through the end of June. For the first six weeks of 3Q22, the 10% gain of the FTSE Developed Index has largely hinged on the Philadelphia Semiconductor index (SOX) generating a 19% total return. Similarly, among the 40 largest Index weights of the indicative iEdge SG Advanced Manufacturing Index, the 10 best performing stocks for the past six weeks have included seven technology stocks. These have included Aztech Global, UMS Holdings, Frencken Group, Venture Corporation, ISDN Holdings, Valuetronics Holdings, and AEM Holdings. Together the seven stocks averaged 9% total returns over the six weeks, reducing their average decline in total return to 12%.
Source: SGX, Refinitiv, Bloomberg (Data as of 12 August 2022)
Relevant drivers for the Sector going into 2023 include downstream orders and further downstream consumer demand, the sub-drivers of 5G and automotive markets, as well as cloud services and data centres, while potential supply chain disruptions and labour costs on the inflation front. Labels: AEM, UMS, ISDN, Aztech Gbl, Frencken, Venture, China Sunsine, Food Empire, Valuetronics, Delfi REIT Watch - Data Centre, Industrial as Well as Diversified S-Reits Leading Q3 2022 PerformanceAuthor: SGX  GLOBAL stock markets have been led by technology, consumer cyclicals and Reit sectors in Q3 2022-to-date. In Singapore, the S-Reits and property trusts sector gained 4.9 per cent in total returns and received S$8 million of net institutional inflows during this period. The sector’s performance was led by trusts within the data centre, industrial and diversified sub-segments. These 3 sub-segments averaged 12 per cent, 8.2 per cent and 4 per cent respectively in total returns in the Q3 2022-to-date. The top 5 performing trusts in Q3 2022-to-date were Digital Core Reit, Daiwa House Logistics Trust, EC World Reit, Frasers Logistics & Commercial Trust and Ascendas India Trust. Digital Core Reit, a pure-play data centre S-Reit which listed in December 2021, reported its first half-year financial results and declared a distribution per unit (DPU) of 2.37 US cents for the period from Dec 6, 2021 to Jun 30, 2022. Its portfolio value stands at US$1.46 billion with a 100 per cent occupancy rate. The Reit will be targeting new markets such as Frankfurt, Chicago and Dallas for acquisitions. Daiwa House Logistics Trust, which also listed in 2021, has a portfolio of 14 logistics assets across Japan, valued at 81 billion yen (S$832 million). The trust announced a DPU of 3.09 Singapore cents for the period from Nov 26, 2021 to Jun 30, 2022. The trust manager believes that while a large supply of logistics space is expected in 2022 and 2023, demand is expected to remain buoyant due to business expansions, relocation for more efficient network, obsolescence of current existing facilities, and increase in the volume of storage goods. EC World Reit reported H1 2022 net property income (NPI) of S$57.9 million, registering a year-on-year growth of 4.2 per cent, and H1 2022 DPU of 2.77 Singapore cents, representing a year-on-year decline of 9.6 per cent. The Reit manager noted that recent lockdowns in China which occurred in the second quarter, did not have material impact on the Reit. EC World Reit believes that domestic demand in China will continue to grow, with online retail set to increase faster than offline retail in 2022. The Reit will continue to focus on its e-commerce and downstream logistics properties to capture the pent-up demand for logistics services and warehousing facilities. Frasers Logistics & Commercial Trust in its Q3 2022 business update noted that it achieved full occupancy rate for its logistics and industrial assets while commercial assets maintained occupancy rates of 91.3 per cent. The trust believes that the overall operating environment is expected to further improve and observed strong tenant activity as countries continue to adopt an endemic approach to living with Covid-19 with a progressive return towards normalcy. Ascendas India Trust reported a 9 per cent year-on-year increase for H1 2022 NPI and declared H1 2022 DPU of 4.28 Singapore cents, representing an increase of 2 per cent year on year. The trust noted that the stronger performance was backed by higher occupancy in major IT parks and observed an increase in physical park population, as India resumes normalcy.
REIT Watch is a weekly column on The Business Times, read the original version Fewer Director Filings Amid Focus on Company EarningsAuthor: SGX  FOR the 4 local trading sessions that spanned Aug 5 to 11, the Straits Times Index (STI) gained 1 per cent, with the FTSE China A50 Index gaining 0.8 per cent, the Hang Seng Index declining 1 per cent and the FTSE Bursa Malaysia KLCI slipping 0.7 per cent. Overall, institutions were net buyers of Singapore stocks over the first 7 sessions of August with S$341 million of net inflows. OCBC, DBS and Keppel Corporation led the net institutional inflows for the 7 sessions through to Aug 10. Meanwhile, UOB, Mapletree Industrial Trust and NetLink NBN Trust led the net institutional outflows for the same 7 sessions. Share buybacks There were 11 primary-listed stocks conducting share buybacks over the 4 sessions ended Aug 11, with a total consideration of S$48 million up from S$26.5 million for the preceding 5 sessions. Keppel Corporation, Wilmar International and OCBC led the consideration tally. Keppel bought back 2,398,000 shares at an average price of S$7 per share. On the current mandate, it has bought back 1.93 per cent of its issued shares (excluding treasury shares) as of Aug 11. Director and substantial shareholder transactions The 4 trading sessions saw close to 50 changes to director interests and substantial shareholdings filed for fewer than 20 primary-listed stocks. This included 3 company director acquisitions with no disposals filed, while substantial shareholders filed 4 acquisitions and 5 disposals. First Sponsor Group Between Aug 4 and 5, First Sponsor Group non-executive chairman Calvin Ho Han Leong acquired 300,000 shares of the company at an average price of S$1.29 per share. With a consideration of S$388,211 this increased his total interest in the group from 46.44 per cent to 46.47 per cent. It followed on from the acquisition of 599,000 shares of the company at an average price of S$1.37 per share between Mar 17 and 18 and 63,900 shares at S$1.34 per share on Feb 24. Ho was appointed non-executive chairman of the company in April 2015. Prior to this, he had served as the non-executive vice-chairman of the company since Oct 1, 2007. He has also accumulated extensive experience during his tenure as CEO of Singapore-incorporated Tai Tak Estates. EnGro Corporation On Aug 4, EnGro Corporation substantial shareholder Chua Wee Keng acquired 61,400 shares of the company at S$1.27 per share. With a consideration of S$78,217, this increased his direct interest in the company from 7.66 per cent to 7.71 per cent. Chua has gradually increased his interest in Engro Corporation from 7.39 per cent prior to Jun 1. EnGro is a leading provider of building materials, with more than 40 years of operational experience shaping landscapes in various parts of Asia. The group recorded a revenue of S$129.6 million in 2022, representing a 33.7 per cent increase from the S$96.9 million registered in 2020, boosted by a turnaround in the Singapore construction sector.
Inside Insights is a weekly column on The Business Times, read the original version Last Week’s Institutional Rotation Into Banks & REITsAuthor: SGX
Last week, Singapore stocks attracted S$182 million of net institutional inflows, following the S$152 million of net outflow for the preceding week. This brought the combined net institutional outflow for the 2022 year to 5 Aug to S$48 million.
Source: SGX, Refinitiv, Bloomberg (Data as of 5 August 2022) In contrast to the above 30 stocks, there were 25 stocks that attracted net institutional outflows of more than S$1.0 million last week, led by United Overseas Bank, ST Engineering, NetLink NBN Trust, Yangzijiang Shipbuilding (Holdings) and Yangzijiang Financial Holding. Yesterday, Yangzijiang Shipbuilding (Holdings) reported a 70% YoY increase in 1H22 revenue to RMB 9.7 billion, backed by higher contribution from all segments. Over the week, the STI gained 2.2%, returning to 9 May levels. For the first 30 weeks of 2022 the STI has generated a 7.6% total return, compared to an 11.7% decline for the FTSE Developed Index. With banks making up more than 40% of the STI, last week’s reporting of 2Q22 and 1H22 results of DBS and OCBC provided much focus for Index investors. For the Banks, 2Q22 YoY Net Profit growth varied from DBS reporting 7%, United Overseas Bank reporting 11% and OCBC reporting 28%. At S$6.0 billion for 2Q22, the combined quarterly NII of the trio has beat the recent combined NII high of S$5.75 billion in 3Q19. This was also the seventh consecutive quarter of QoQ NII growth. Note the SDPR STI ETF will go ex-dividend on 11 August. OCBC also ranked among the five strongest performing STI stocks for the week. A total of four of the five of the STI’s strongest gainers last week have recently reported financial results. On 28 July, Jardine Cycle & Carriage reported a 51% YoY increase in underlying profit to US$522 million. Last week, Wilmar International reported 2Q22 core net profit more than doubled YoY to US$652 million, Sembcorp Industries reported 1H22 net profit before exceptional items was up 94% YoY to S$490 million, and OCBC reported 2Q22 net profit grew 28% YoY to S$1.48 billion. City Developments will report 1H22 results before the 11 August open. A non-STI stock, Raffles Medical Group, saw the fifth highest net institutional inflows last week, while rallying 17% last week and reporting 1H22 group revenue of S$382 million, representing 11.2% YoY growth. Attributed to the return of patients to its clinics, the 1H22 healthcare division revenue of S$256 million was up 24% YoY. For more details, click here. While global GDP releases are pointing to technical recessions or near technical recessions, both earnings and employment data are providing some key qualifications to the technical readouts. The above earnings reports have coincided with preliminary data from the Ministry of Manpower (MOM) showing Singapore’s employment (excl. migrant domestic workers) grew by 64,400 (or up 1.9% QoQ) in 2Q22, a faster pace than seen in 1Q22 (click here for more). Similarly in the US, the upbeat earnings season has been accompanied by 3.3 million jobs created in the first seven months of 2022. However, looking ahead, recent corporate outlooks have flagged risks including potentially more food and energy shortages from Russia-Ukraine conflict, more aggressive interest rate hikes and a significant slowdown in regional growth as challenges going into 2023. What's Trending - SG Banks & Notable EarningsAuthor: SGX What you need to know about the SG market last week#whatstrending feat. Beansprout Ever wondered what is currently driving the local and regional markets? #whatstrending is a new series addressing some of the most trending questions/topics on the markets for investors. Designed to be educational, expect to get factual information on what is driving sectors and stocks listed on SGX, featuring insights from professionals in the community.
Today, we hear more from Beansprout, Singapore’s next-gen investment research and advisory platform. Gerald Wong, founder and CEO, shares his thoughts on market developments.
Q: The results of Singapore banks are always closely watched. What are some of the key takeaways from the results? From Gerald, founder and CEO of Beansprout: Rising interest rates impact. Singapore banks benefited from rising interest rates and reported an increase in net interest margin (NIM) and higher profits in 2Q22. OCBC saw the sharpest improvement in NIM with a 16 basis point (bp) improvement compared to the previous quarter, while UOB’s NIM grew the least with a 9 bp increase. What also caught our attention was that DBS shared its NIM had already exceeded 1.80% in July, rising further from 1.58% in 2Q22, and expressed confidence that NIM could reach 2.00% between 3Q22 and 4Q22. Asset quality in focus. Investors are expressing growing concerns about a deterioration in asset quality for Singapore banks, after UOB reported an increase in non-performing loans (NPLs) to 1.7% in 2Q22 from 1.5% in 2Q21. UOB management explained that this was due to its exposure to a Chinese property company. In total, its direct exposure to Chinese developers is estimated to be 1% of its loan book. China companies exposure. This increase in NPLs was not seen for DBS and OCBC. In fact, OCBC’s NPLs declined to 1.3% in 2Q22. In response to concerns about exposure to slowing Chinese growth, Singapore banks shared that they predominantly service the offshore needs of Chinese companies when they expand overseas, as well as existing customers within ASEAN when they expand into China. As a result, their exposure to domestic activities of Chinese companies is limited. DBS’ NPL remained unchanged compared to the previous quarter at 1.3%. Balance sheet and dividends. Singapore banks continue to maintain a strong balance sheet position. DBS commented that it intends to review its dividend policy at the end of this year and could potentially hike its dividend in 2023.  Q: Were there any other earnings announcements that surprised the markets? From Gerald, founder and CEO of Beansprout: STI Outperformance with 5.1% gain YTD. Apart from the strong results reported by the banks, the recent earnings season also brought many positive surprises for investors. This has helped propel the Straits Times Index (STI) to be one of the best-performing indices globally so far this year, with a year-to-date gain of 5.1% as of 5th August 2022.
Notable company earnings last week: Singapore Airlines reported 1QFY23 operating profit of S$556mn as soaring air travel demand led to its second highest quarterly operating profit in its history. As of 1QFY23, SIA’S passenger capacity was at 61% of its pre-pandemic levels. It plans to reach 76% of its pre-COVID passenger capacity by 3QFY23. Wilmar’s 1H22 profit rose 55% to US$1.2bn on the back of improved performance across all key business segments. An interim dividend of S$0.06 was proposed, the highest interim dividend since listing. Sembcorp Industries announced its profit surged nearly 11 times in 1H22 to S$490 million, boosted by higher electricity prices in Singapore and India. Management indicated that it “may reward investors with a special dividend” for FY2022. Raffles Medical Group reported a profit of $59.7 million 1H22, a 51% rise compared to the previous year. This came largely on the back of higher revenue from Covid-19-related services as well as a comeback in medical tourism as Singapore reopened its borders. According to SGX data, Chairman Dr Loo Choo Yong also bought more than 350k shares of Raffles Medical Group last week.  For more Beansprout’s Fresh Takes, visit growbeansprout.com. REIT Watch - SGTI 2022 Shows More S-Reits Reporting Non-financial MetricsAuthor: SGX  S-Reits and business trusts see an improvement in their Singapore Governance and Transparency Index (SGTI) 2022 scores, increasing marginally to 85.3 points from 85.0 last year. In the Reits and business trusts category, Ascott Residence Trust retained its top position with an overall score of 110.6. Ascendas Reit overtook Far East Hospitality Trust this year with 108.7 points, with the latter ranked third at 107.4 points. Lendlease Global Commercial Reit, whose score improved 6.0 points, made it to the top 10 this year. Findings by the SGTI highlighted year-on-year improvements in practices for interested person transaction (IPT) and performance fees. Moreover, the proportion of trusts that had a minimum of 3 full-time representatives with at least 5 years of relevant management experience improved from 91 per cent to 98 per cent. SGTI notes that Reits and business trusts, given their unique business models, are subjected to additional guidelines such as the Code on Collective Investment Schemes, hence complementing the existing SGTI framework (e.g. leverage, structure, IPT, competency of manager, fees). Results pertaining to sustainability-related disclosures were also commendable with 84 per cent of trusts disclosing their non-financial performance indicators compared to 77 per cent last year. Overall, the mean score of the Reits and business trust category increased by 0.3 points year on year and the mean bonus points for good disclosure practices increased by 0.7 points to 19.2 points. Mean penalty points for poor disclosure practices, such as discrepancies in corporate announcements, rose 0.3 points to 5.4 points. The top 5 Reits and property trusts with the most year-on-year improvements in overall scores include: Keppel DC Reit (+17.5 points), Frasers Hospitality Trust (+13.4 points), Sabana Industrial Reit (+13.3 points), First Reit (+12.0 points) and Dasin Retail Trust (+9.7 points). About SGTIThe SGTI is an annual assessment of Singapore-listed companies on their corporate governance disclosure and practices, as well as the timeliness, accessibility, and transparency of their financial results announcement. With increased scrutiny on corporate stewardship, SGTI offers stakeholders insights into the accountability and transparency of companies. It is a collaboration among CPA Australia, NUS Business School's Centre for Governance and Sustainability, and the Singapore Institute of Directors, supported by The Business Times. The SGTI 2022, which assessed companies based on their annual reports for Financial Year 2021 released by May 31, 2022, is divided into 2 categories – general category (489 companies) and the Reits and business trusts category (44 trusts). The mean overall scores of both categories reached all-time highs of 70.6 (general category) and 85.3 (Reits and business trusts category) respectively, with improvements across all 5 pillars of the assessment framework. REIT Watch is a weekly column on The Business Times, read the original version
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