ComfortDelGro dropped from STI, replaced by liquor giant Emperador

TRANSPORT company ComfortDelGro has been dropped from the Straits Times Index (STI) in the latest quarterly review, with recently-listed Emperador replacing it on the benchmark index.

The change to the STI, which tracks the performance of the 30 largest and most liquid companies listed on the Singapore Exchange (SGX), takes effect at the start of business on Sep 19, FTSE Russell said in a statement on Thursday (Sep 1).

Companies gain entry into the STI at quarterly reviews if they rank 20th or higher among eligible securities by full market capitalisation; conversely, those that rank 41st or below among all eligible securities are deleted from the list.

Emperador, which is primary-listed on the Philippine Stock Exchange and a subsidiary of Filipino billionaire Andrew Tan’s Alliance Global Group, carried out a secondary-listing on the SGX mainboard in July.

It is the largest liquor company in the Philippines, and its portfolio includes whiskey brands such as The Dalmore and Jura, as well as brandy under the Fundador and its eponymous Emperador brands.

Analyst Brian Freitas of Periscope Analytics, who publishes on Smartkarma, said in an Aug 24 note that Philippine-based Emperador was in the “outright inclusion zone” for the STI based on closing prices on Aug 22, as its market capitalisation of S$8.3 billion put it in the 20th spot among eligible counters.

Since its debut on the SGX, Emperador has gained 10 per cent from its S$0.45 closing price on July 14 to its closing price of S$0.495 on Sep 1.

Freitas noted that passive index trackers would need to purchase some 25.6 million Emperador shares as a result of its inclusion on the STI.

ComfortDelGro’s removal from the index comes from its being ranked the smallest among existing STI constituents, with a market capitalisation of S$3.1 billion as at Aug 22. Its share price has fallen 13.6 per cent over the past year, compared to a 4.4 per cent gain in the STI.

Freitas noted that the counter ranked 39th among the eligible securities in terms of market capitalisation.

He added that the deletion will mean that passive index trackers would need to sell some 22.1 million ComfortDelGro shares – around 4 days of its daily average trading volume over the past month.

Following ComfortDelGro’s deletion, the smallest counter on the index would be Keppel DC Reit, which had a market capitalisation of S$3.4 billion as at Aug 22, ranking it 38th on the list of eligible securities.

The data centre real estate investment trust (Reit) has been the worst index performer in the year to date, with the price of its units down 21.5 per cent as at Aug 31, against the index’s 3.1 per cent gain.

The next quarterly review of the STI will take place in December. Should any existing constituent become ineligible as a result of a corporate action before the next review, stocks on the STI reserve list will replace the counter.

Olam is the largest counter on the STI reserve list. Its market capitalisation of S$5.7 billion as at Aug 22 ranked it 25th among the eligible securities, Freitas noted.

The other stocks on the STI reserve list in order of their size are Suntec Reit, Keppel Reit, Frasers Centrepoint Trust and Ascott Residence Trust.