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Author: SGX   |   Latest post: Mon, 27 Sep 2021, 11:20 AM

 

Technology Demand Led Manufacturing Stocks in 1H21

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  • Similar to the role of manufacturing in Singapore’s economy, Singapore’s 20 most traded stocks with manufacturing-related activities have also contributed 20% to the combined average daily turnover of stocks listed for trading on the SGX in 1H21. 
     
  • Singapore 20 most traded stocks with manufacturing-related activities in 1H21 span the Technology (Hardware/ Software), Consumer Non-Cyclicals, Industrials, Healthcare and Materials & Resources Sectors and averaged a 16% total return in 1H21. Like the broader market, most of the gains were attributed to 1Q21.
     
  • Five of the 20 stocks representing the Technology (Hardware/ Software) Sector - Frencken, UMS, Nanofilm, AEM and Venture, averaged a 25% total return in 1H21. Aztech Global, with three key segments of IoT Devices and Data-communication products, LED lighting products, and other electrical products listed on 12 March.


Manufacturing was a robust pillar of the economy and a resilient segment of the stock market in 1H21. Singapore’s 20 most traded manufacturing-related stocks through 1H21 span five key sectors - Technology (Hardware/ Software), Consumer Non-Cyclicals, Industrials, Healthcare and Materials & Resources. The 20 stocks averaged a 16% total return in 1H21, with the average total return grouped by the five relevant sectors illustrated below.

20 most traded manufacturing stocks - average 1H21 Total returns by sector

Frencken, UMS, Nanofilm, AEM & Venture averaged a 25% 1H21 Total Return

Key highlights of the most traded manufacturing-related stocks of the Technology Sector include
Aztech Global listing in March 2021. For is 1QFY21 (ended 31 Mar), Aztech Global reported NPAT increased to $13.2 million (with 11.4% net profit margin) from $0.6 million in 1QFY20. This was on the back of 1QFY21 revenue of $115.9 million, driven mainly by strong production volume and shipment of IoT and Data-communication products to customers that lifted revenue from this segment to $106.3 million. Supported by its core strengths in R&D, design, engineering and manufacturing, Aztech Global’s key products are IoT Devices, Data-communication products and LED lighting products. Aztech Global noted on 31 May ithat ts operations in Malaysia has obtained the permit from the Ministry of International Trade and Industry to operate during the 1-14 June lockdown. The company will release its 1HFY21 (ended 30 June) after market on 30 July.

The 1H21 started with industry focus on the impact that global demand for semiconductors was having on supply chains. In the UMS FY20 Annual Report, Chairman Andy Luong noted that global chip demand for automotive electronics had been gaining momentum since 4QFY20 and will continue to serve as a key growth driver as demand exceeds supply. World Semiconductor Trade Statistics estimate semiconductor sales are expected to accelerate in 2021 growing 8.4%, also supported by shortages due to the pandemic-fueled demand. Frencken Group, which has customers across the world, estimated in May that its semiconductor segment will post revenue growth in 1H21 as compared to 2H20, on the back of strong global demand for front-end and back-end semiconductor equipment. All the while, the SOX Index gained 23% in 1H21. UMS Holdings and Frencken Group were two of the five stocks within the group of 20 that were recipients to net institutional and net propriety inflows in 1Q21 and 2Q21.

Comprehensive semiconductor and electronics test solutions provider AEM Holdings’ current revenue guidance for FY21 (ended 31 Dec) is currently between S$460 million to S$520 million with heavier weighting in 2H21. This followed FY20 revenue of S$519 million and FY19 revenue of S$323 million. In 1Q21, CEI became a subsidiary of the Group. AEM Holdings has signaled its intention to continue to strategically expand and further establish its industry leadership through both development of in-house technological capabilities as well as through mergers and acquisitions. 

Nanofilm Technologies International raised S$510 million in its October 2020 listing, the IPO price was S$2.59, and stock is trading at double that price at S$5.44 today. The company also achieved a record set of results for FY20 (ended 31 Dec), with Group revenue increasing 53% YoY to S$218.3 million, with profit after tax seeing a faster pace of growth of 68% to S$58 million. The balance sheet had cash and bank balances of S$227 million as at 31 December 2020. Nanofilm Technologies International also owns more than 70 patents and trademarks, with over 20 pending applications.

Venture Corporation has gained 6% since providing a general corporate update on 23 June, highlighting that despite recent challenges of the endemic, its entities in Malaysia have been able to continue operations as an essential economic sector, enabling Venture to deliver on its customers and partner commitments. The Group also added that a new series of next-generation devices in the Lifestyle Consumer Electronics have been developed, with plans afoot to launch these products in 2H21. 

Singapore’s SIPMM PMI has seen 12 months of expansion, while the electronics PMI has been in 11 months of expansion. At 50.8 the broad PMI is up from 50.5 at the end of 2020, while the Electronics PMI at 50.6 is down from 51.2 at the end of 2020. Similar to 2020, Singapore’s 1Q21 manufacturing growth was supported by output expansions in the electronics, precision engineering, chemicals and biomedical manufacturing clusters, which outweighed output declines in the transport engineering and general manufacturing clusters. For the 2Q21 manufacturing report, the industry will be looking for further signs of broader growth beyond the technology segments.

Across South East Asia, the broader manufacturing recovery has been impacted by a resurgence in COVID-19 infections. MAS Managing Director Ravi Menon noted on 30 June that in South East Asia, the recovery has been impacted by a resurgence in COVID-19 infections of varying intensities and the weighted average of Indonesia, Malaysia, Thailand, the Philippines and Vietnam manufacturing PMIs (weighted by shares in Singapore’s non-oil domestic exports) fell to 51.7 in May, from 53.1 in April, even as the global index strengthened.

The 20 most traded manufacturing-related stocks listed on SGX are tabled below and sorted firstly by Sector and secondly, by the highest total returns over the 1H21.

Most Traded Manufacturing Stocks

Stock Code

Sector

2021 Total Return YTD % (SGD)

1Q21 Total Return % (SGD)

1Q Net Insti & Net Prop Flow S$M

2Q21 Total Return % (SGD)

2Q Net Insti & Net Prop Flow S$M

Golden Agri-Res

E5H

Consumer Non-Cyclicals

47

32

11

12

13

Oceanus^

579

Consumer Non-Cyclicals

41

44

-11

-3

-2

Japfa

UD2

Consumer Non-Cyclicals

1

11

8

-9

-5

Wilmar Intl

F34

Consumer Non-Cyclicals

0

17

88

-15

-139

ThaiBev

Y92

Consumer Non-Cyclicals

-5

3

-103

-8

-105

Riverstone

AP4

Healthcare

16

11

0

4

3

UG Healthcare

8K7

Healthcare

-2

-4

-2

3

-11

Medtecs Intl

546

Healthcare

-9

-7

-1

-3

8

Top Glove

BVA

Healthcare

-26

-20

-70

-7

-19

ISDN

I07

Industrials

80

49

-3

21

4

YZJ Shipbldg SGD

BS6

Industrials

52

34

141

14

77

ST Engineering

S63

Industrials

4

2

-64

2

-3

SATS

S58

Industrials

-1

9

50

-10

-53

Sembcorp Marine

S51

Industrials

-16

19

51

-29

-34

Jiutian Chemical

C8R

Materials & Resources

6

1

-2

5

-2

Frencken

E28

Technology (Hardware/ Software)

45

16

8

25

15

UMS

558

Technology (Hardware/ Software)

42

23

16

15

40

Nanofilm

MZH

Technology (Hardware/ Software)

25

14

-25

10

41

AEM

AWX

Technology (Hardware/ Software)

12

20

-25

-6

-100

Venture

V03

Technology (Hardware/ Software)

2

3

-27

-2

-113

Total

 

 

 

 

39

 

-385

Average

 

 

16

14

 

1

 

Median

 

 

5

12

 

0

 

Source: SGX, Refinitiv, Bloomberg (Data as of 30 June 2021), ^on SGX Watch List

 

While the Technology Sector led the 20 stocks in 1H21, the four Healthcare stocks averaged a single digit percentage decline in 1H21. Top Glove Corporation Bhd and Medtecs International Corporation were among the least performing of the 20 manufacturing-related stocks in 1H21 which has coincided with broader market rotations and rebalances. While the two stocks have averaged an 18% decline in 1H21 total return, they both maintained triple digit percentage gains from end of March 2020 to the end of June 2021. After UMS Holdings and Frencken Group, Medtecs International Corporation was the recipient if the highest net institutional and net proprietary inflow proportionate to market capitalisation among the 20 most traded manufacturing stocks in Q21. As reported on 6 May, Medtecs International Corporation has started site selection for the construction of a personal protective equipment (“PPE”) manufacturing facility to further strengthen the Group's position as a leading PPE stockpiling provider and in addition, the Group has continued to expand its retail business, including through its Amazon US shop, which has increased its 1Q21 daily sales volume by more than 10-fold from 4Q20.

Sri Trang Gloves (Thailand) PLC was secondary listed on SGX on 10 May. The company is one of the largest glove manufacturers globally, manufacturing and distributing rubber gloves for a wide range of industries including healthcare and medical. The company currently has three production plants with 145 production lines in Thailand, and its products are exported to more than 140 countries. A comprehensive overview of the business can be found here.

Engineering solution provider ISDN Holdings was the strongest of the 20 most traded manufacturing stocks in the 1H21. On June 18, ISDN Holdings announced a global strategic partnership with communications solution provider Whizpace Pte Ltd to deliver wide-area Industry 4.0 and IoT solutions globally. While ISDN Holdings represents the Industrials Sector, on the outlook for the regional supply and value chains, ISDN Holdings noted in its 30 April AGM Q&A it had been seeing the benefit of China’s broad ramp in semiconductor capex in its business:
 

  • Firstly, the geopolitical industry competition and global trade tensions have diverted trade, supply chains and capital to Southeast Asia.
  • Secondly, the trade tensions have accelerated China’s industrial push towards Industry 4.0 automation as it seeks to avoid competing with Southeast Asia on cost, and seeking instead to push up the value chain into advanced industry.   Moving up the value chain so to speak, involves developing new products and services and creating new value propositions that impact the broader chain, as explained by NUS’ Puay Guan Goh in 2018.
  • Thirdly, ISDN Holdings believes China’s technology ecosystem is looking to reduce its reliance on US and European technology in favour of Asia-centric suppliers.


Industry 4.0 is the commonly used term to capture the impact of digital transformation in manufacturing and related production industries, and value creation processes and as highlighted by the EDB, Singapore has embraced Industry 4.0, and is moving its industrial base up the value chain to strengthen its position as the leading industrial hub for companies worldwide.

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