Singapore's Electronics exports rose 6.1% to S$4.3 billion in January 2017 from the same period a year ago. This rising trend in Singapore’s electronics exports generally bodes well for the Electronic Components sub-segment.
The Electronic Components sub-industry was among best performing sub-sectors in Singapore's IT industry, generating average total returns of 31.7% and 66.7% in the year-to-date and last 12 months respectively, compared to the STI's total returns of 7.8% and 21.2% in the same period.
The three best-performing Electronic Components stocks in the year-to-date are AA Group Holdings (+136.8%), CPH (+100.0%) and GSS Energy (+42.4%). These stocks averaged a total return of 93.1% and 92.9% respectively in the YTD and last 12 months.
Boost From Increased Momentum in Electronics Exports
Singapore's Non-Oil Domestic Exports (NODX) rose 8.6% YoY in January 2017 to a total of S$13.6 billion, IE Singapore said in a report dated 17 February (click here). Electronics exports accounted for about 31.5% of the total figure, and gained 6.1% YoY to S$4.3 billion from the year-earlier period. Reflecting the growing momentum in domestic exports, total trade value also rose 5.7% and 3.5% YoY in December and November 2016 respectively.
Exports of Integrated Circuits (ICs) are the main reason behind the increase, registering a 31.6% YoY increase from January last year. Integrated Circuits also make up 53.2% of total electronics exports, with a total trade value of S$2.3 billion in January 2017.
Singapore's Electronic Components sub-segment is part of the larger Electronic Equipment, Instruments & Components industry, which includes Electronic Equipment & Instruments and Technology Distributors, as categorised by the Global Industry Classification Standards (GICS®). Companies within this sub-industry perform well when Singapore’s electronics exports improve.
Singapore Electronics Exports (S$M)
Source: Bloomberg (data as of 20 February 2017)
Electronic Components Stocks Among Best Performers
Singapore's Information Technology (IT) sector consists of five sub-industries as categorised by GICS® – Electronic Equipment & Instruments, Electronic Components, Semiconductor Equipment, Technology Distributors, IT Consulting & Other Services.
- Electronic Components was the second-best performing sub-industry, generating an average total return of 31.7% in the year-to-date, and 66.7% over the past 12 monts.
- IT Consulting & Other Services, consisting of seven companies, generated a total return of 27.4% YTD.
- Technology Distributors consists of 16 companies and generated a total return of 26.8% YTD.
- Electronic Equipment & Instruments consists of two companies and generated a total return of 1li.% YTD.
- Systems Software was the best-performing sub industry in the YTD but comprises only one activelli raded stock, Stratech Group, which generated 40.9% in the YTD.
The entire Singapore IT sector registered an average total return of 19.4% and 43.2% in the YTD and one year respectively, compared to the Straits Times Index (STI) which generated total returns of 7.8% and 21.2% in the same period. Singapore IT stocks also outperformed the MSCI Asia ex Japan Information Technology Index, which generated total returns of 10.1% and 42.4% in the YTD and one year respectively.
YTD Total Returns of Sub-Industries in Singapore’s IT Sector
Source: Bloomberg (data as of 20 February 2017)
There are a total of 15 stocks on SGX categorised by GICS® to the Electronic Components sub-industry. The three best-performing stocks in this sub-sector are AA Group Holdings (+136.8%), CPH (+100.0%) and GSS Energy (+42.4%). These stocks averaged total returns of 93.1% and 92.9% respectively in the YTD and last 12 months. These three companies in the sub-sector are extremely export reliant, with the bulk of their revenue coming from exports to North America, Europe, China and South East Asia. A summary of the business model and geographical revenue segmentation of each company is detailed below.
AA Group(+136.8% YTD)
AA Group was founded in 1995 and specialises in producing high precision cold forged loudspeaker parts. The company also serves manufacturers of automotive and commercial audio devices, home audio-visual products and other consumer electronic products. The bulk of its revenue comes from North America and Europe. In FY 2015, the company reported 64.3% and 28.2% of its revenue coming from North America and Europe respectively.
CPH, a Singapore based company was founded here in 1981 and manufactures printed circuit boards and advance interconnect substrates. The company serves customers in many industries such as telecommunications, automotive, industrial, consumer electronics and even healthcare and government organisations. CPH derives most of its revenue from Europe and North America. In FY 2016. The company reported 57.2% and 16.3% of its revenue from Europe and North America respectively.
GSS Energy(+42.4% YTD)
GSS Energy focuses on precision engineering within the Oil and Gas industry. It also provides production technology to manufacturers from various industries such as audio entertainment, communication, and office automation. Majority of its revenue comes primarily from Indonesia. In FY 2015, 56.9% of its revenue was from Indonesia, 15.0% from China and 3.7% from Germany.
Constituents of the Electronic Components Sub-Industry
The table below details the 15 stocks in the Electronic Components sub-industry sorted by market capitalisation. Click on each stock to visit its profile page on SGX StockFacts.
|Elec & Eltek International Co||E16||289.1||29.4||67.2||0.6||20.2|
|Chuan Hup Holdings||C33||241.8||10.6||0.1||0.6||13.1|
|Broadway Industrial Group||B69||103.6||15.8||69.2||0.7||N/A|
|AA Group Holdings||5GZ||58.1||136.8||201.4||2.1||N/A|
|Regal International Group||UV1||30.6||4.8||-2.5||0.2||27.9|
Source: SGX, Bloomberg & SGX StockFacts (data as of 20 February 2017)*Trading of Europtronic shares is currently suspended