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Most traded manufacturing stocks averaged 16% YTD return: SGX

DESPITE global headwinds, eight most actively traded manufacturing stocks in Singapore averaged a 16 per cent year-to-date (YTD) return in 2019 as at Oct 4, and received more than S$510 million in net institutional inflow combined during this period, the Singapore Exchange (SGX) said in a research note on Monday. 

These eight stocks include: Wilmar International (+19 per cent), Thai Beverage (+46 per cent), Yangzijiang Shipbuilding (-22 per cent), Sembcorp Marine (-23 per cent), Venture Corp (+14 per cent), ST Engineering (+15 per cent), AEM Holdings (+43 per cent) and Hi-P International (+34 per cent).

"Just as manufacturing contributes at least 20 per cent to Singapore's GDP (gross domestic product), eight of Singapore's 40 top stocks by turnover over the first nine months of 2019 maintained a manufacturing focus," SGX noted.

Singapore's most actively traded 40 stocks in the first nine months of 2019 saw a combined net institutional inflow of close to S$1 billion, and averaged a 13 per cent total return this year through to Oct 4, SGX said. 

According to the Singapore bourse, Wilmar and Thai Bev saw similar net institutional inflows of close to S$200 million, with Thai Bev emerging the stronger of these two stocks. For the nine months ended June 30, Thai Bev's sales revenue rose 18 per cent year on year (y-o-y), led by growth from its beer and food segments. In addition, the group is expanding its Vietnam business, and attributed 23 per cent of its revenue to Vietnam for the period, up from 16 per cent for the nine months ended September 2018.

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Venture Corp and ST Engineering also generated similar 14 per cent total returns in 2019 through to Oct 4, with ST Engineering seeing S$170 million in net institutional inflow, and Venture Corp seeing S$40 million in net institutional outflow. For the half-year ended June 30, ST Engineering's net profit was up 14 per cent y-o-y, while its revenue rose 6 per cent.

For AEM Holdings and Hi-P International, both stocks saw similar net institutional inflow totalling S$25 million for the first nine months of 2019. AEM Holdings previously reported that as at Sept 12, the company had received sales orders worth S$280 million for delivery in the financial year ending Dec 31. Its management has also revised its revenue range upwards to between S$285 million and S$305 million for FY2019, versus revenue of S$262 million for FY2018.

Separately, the two maritime companies with manufacturing activity – Yangzijiang Shipbuilding and SembMarine – generated similar YTD declines of about 22 per cent as at Oct 4. Nonetheless, SGX noted that the majority of global trade is handled by shipping, and that for the first four months this year, prior to the US-China trade talks ending without resolution in May, these two stocks had averaged an 18 per cent total return.

Globally, SGX also noted that manufacturing activity, with its links to trade and other key sectors, is a recent focus of global economic data and the US Fed policy. Just last week, the ISM survey of US factory activity fell to its lowest level since June 2009, while US manufacturing jobs declined in September.  

"Market performances suggest that weaker global manufacturing surveys this year have impacted the smaller capitalised manufacturing stocks more than the larger manufacturing capitalised stocks, possibly due to the benefits of scale, or the adaptability that can come with diversified business streams," SGX added.

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