In 2016, Singapore’s Consumer Staples Sector surged 25.8% on a capitalisation-weighted total return basis. There was a degree of consistency in the returns of the 10 biggest stocks of the Sector with total returns averaging 28.9%.
Among the 10 biggest stocks of the Consumer Staples Sector, the three best performers were Japfa, Super Group & GAR. For the nine months ending 30 Sep 2016: Japfa reported operating profit of US$268.4 million, up 90% from a year ago; while GAR reported profit attributable to owners of the company at US$353.3 million compared to a loss of US$9.2 million a year ago. Super Group was subject to a proposed acquisition by the world’s leading pure-play CPG coffee company, priced at a 62.5% premium to the preceding close.
The next two best performing sectors were Materials and Information Technology which generated capitalisation-weighted total returns of 17.3% and 14.5% respectively. All Singapore’s key GICS® Sectors generated gains in 2016, with Energy generating the smallest of the gains at 0.9%.
In 2016 the Straits Times Index (STI) generated a 3.8% total return. Total return takes includes the returns on any dividends paid throughout the year. Within the STI, the Sector which was the strongest for the 12 month period was the Consumer Staples Sector.
Consumer Staples stocks are focused on food, beverage and other non-durable products and services. This can include plantations to manufacturers and packagers to food retailers. This sector definition is sourced by Global Industry Classification Standard (GICS®), which also states that the Consumer Staples Sector tends to be less sensitive to economic cycles than the Consumer Discretionary Sector.
Beyond the 30 stocks of the STI, the Consumer Staples Sector was also the strongest segment of the entire Singapore stock market. As illustrated below the Consumer Staples Sector surged 25.8% on a capitalisation-weighted total return basis, with its leading performance followed by the Materials Sector and the Information Technology Sector. All sectors illustrated below gained in 2016.
2016 Indicative Market Cap-weighted Total Returns of GICS® Sectors & Key Industries (%)
Source: SGX, Bloomberg (Data as of 31 December 2016), returns based on year end market capitalisations.
The 10 biggest stocks of the Consumer Staples Sector are tabled below. Throughout 2016, the largest capitalised stock of the Sector was either Wilmar International or Thai Beverage PCL. The three STI stocks that help make to make up Singapore’s Consumer Staples Sector are Wilmar International, Thai Beverage PCL and Golden Agri Resources (GAR). Click on the stock name to see the full stock profile in SGX StockFacts.
|Dairy Farm Intl Hldgs||D01||3.7||24.6||14102.8||6.9|
|Fraser And Neave||F99||-1.9||2.8||3024.1||1.1|
Source: SGX, Bloomberg & SGX StockFacts (data as of 30 December 2016)
Strongest Performers of Consumer Staples Sector Leaders
Among the 10 biggest stocks of the Consumer Staples Sector, the best performer in 2016 was Japfa. Japfa is a leading, pan-Asian, industrial agri-food company dedicated to feeding emerging Asia with essential proteins. The company is headquartered in Singapore and employs over 30,000 people across an integrated network of modern farming, processing and distribution facilities in Indonesia, China, Vietnam, India and Myanmar.
The integrated network includes upstream activities of feed and breeding, midstream activities of milking and fattening and downstream processing and distribution. As discussed here, for the nine months ending 30 Sep 2016, Japfa reported operating profit of US$268.4 million, up 90% from $141.4 million for the nine months ending 30 Sep 2015.
Super Group was the second best performing stock of the 10 biggest Consumer Staples stocks in 2016. The stock was subject to a proposed acquisition by a wholly-owned subsidiary of Jacobs Douwe Egberts B.V. (JDE). JDE is the world’s leading pure-play CPG coffee company and priced the offer at a 62.5% premium to the preceding close.
This price premium was based on the undisturbed share price as of 4 October 2016 which was the last full day of trading of the Super Group shares prior to the date on which a query regarding trading activity was received on 5 October 2016. The details of the proposed cash acquisition of all the issued shares of Super at S$1.30 per share can be found here
GAR was the third best performing stock of the 10 Consumer Staples Sector Leaders. GAR is one of the leading palm oil plantation companies with a total planted area of 482,228 hectares (including smallholders) as at 30 September 2016, located in Indonesia. It has integrated operations focused on the production of palm-based edible oil and fat.
As discussed here, for the nine months ending 30 Sep 2016, Golden Agri Resources reported profit attributable to owners of the company at US$353.3 million compared to a loss of US$9.2 million a year ago. With the results, the GAR Chairman and Chief Executive Officer stated that in the second half of 2016, the CPO market price maintained its current level amidst the recovering palm production and for the 2016 results, GAR had achieved higher downstream margins so far resulting from profit optimisation across the value chain.