Singapore Market Strategy - Inclusion Of Emperador Into The Straits Times Index

Singapore Market Strategy - CGS-CIMB Research 2022-09-02: Inclusion Of Emperador Into The Straits Times Index

SGinvestors.io

Published: 2022-09-02 08:29 AM

EMPERADOR INC. (SGX:EMI) COMFORTDELGRO CORPORATION LTD (SGX:C52)

Emperador (SGX:EMI) will replace ComfortDelGro (SGX:C52) in the Straits Times Index (STI) by FTSE Russell, with effect from 19 Sep.
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One of the ground rules for STI inclusion stated that “a company will be inserted into the STI at the quarterly review if it rises to 20th position or above when the eligible securities are ranked by full market capitalisation (before the application of any investability weightings).”
As of end-Aug 2022, STI ETFs had S$2.2bn worth of AUM.
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- Emperador’s free float of 15.1%, just passed the 15% requirement for inclusion. we estimate Emperador to hold a constituent weight of 0.39% upon inclusion, which could translate into passive inflow worth 3.2x ADTV, or S$2.74m.
While STI exclusion could put pressure on ComfortDelGro’s near-term share price, we see support at S$1.36, based on 13.1x FY23F P/E (2 standard deviation below its 5-year historical mean). We reiterate our ADD call on ComfortDelGro, as we expect further earnings recovery in coming quarters, driven by:
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