SGX Market Updates

Technology Sector Led Market Gains in April & YTD


PUBLISHED ON |

02 May 2017

  • Information Technology (IT) was the best performing of Singapore’s Sectors in the 2017 YTD. The IT Sector generated a 4.9% capitalisation weighted total return in April, taking YTD gains to 33.3%. April was the third consecutive month the IT Sector was the best performing.

  • The largest stock of Singapore IT Sector, Venture Corp reported 1Q17 results on Friday, with net profit up 36% YOY to S$48.6 million. Management attributed profit growth to achieving compelling product & service differentiation, well-regarded engineering and advanced manufacturing capabilities, as well as its new product/programme execution with several customers.

  • Among the 10 largest stocks of Singapore’s IT Sector, Elec & Eltek International Co was the best YTD performer. On 9 April, its board of directors announced the group is expected to record a significant YOY increase of not less than 170% in net profit for 1Q17.




In Singapore and across South East Asia, Information Technology (“IT”) has been the strongest Sector over the first four months of 2017. Both locally and regionally, the gains have been led by semiconductor-related stocks.

Singapore’s IT Sector generated a capitalisation weighted 4.9% total return in April, taking year to date (“YTD”) gains to 33.3%. Singapore’s second best performing Sector was Healthcare, which generated a capitalisation weighted 3.9% total return in April, turning its YTD performance into a positive 1.5% total return. This means all Singapore’s key Sectors have now generated positive YTD returns on a market capitalisation weighted dividend inclusive basis.



2017 YTD Indicative Sector Total Returns (%)


Source: SGX, Bloomberg & SGX StockFacts (data as of 28 April 2017).
Indicative GICS ® Sector performance weighed to market capitalisation at quarter end, in SGD and dividend inclusive.
GICS® Banks Industry used in place of GICS® Financials Sector & GICS® Real Estate Management & Development Industry and REIT Industry used in place of GICS® Real Estate Sector. 



Semiconductor Foundations 

According to the EDB, Singapore is home to 14 silicon integrated circuit [“IC”] wafer fabrication plants, 15 assembly and test operations, and about 30 design centres in Singapore. These electronic manufacturing capabilities means Singapore now accounts for one in ten of the world’s ICs (click here for more). 

Singapore’s largest capitalised IT stock representing the Semiconductor Industry is UMS Holdings, which has generated a 56.6% total return over the first four months of 2017.

There are another 11 stocks representing the Semiconductor Industry within Singapore’s IT Sector. While the 11 stocks have a relatively small average market capitalisation of S$74 million, they have all gained in the YTD, with average returns of 67.8%.

The five next largest capitalised stocks of Singapore’s listed stocks of the Semiconductor Industry after UMS Holdings (558) are Micro-Mechanics (5DD), AEM Holdings (AWX), Ellipsiz (BIX), Avi-Tech Electronics (BKY) and Sunright (S71)



Information Technology Sector Leaders

The largest stock of Singapore IT Sector, Venture Corp reported 1Q17 results on Friday evening, with net profit up 36% YOY to S$48.6 million. Venture is headquartered in Singapore, with the Group comprising 40 companies with global clusters in Southeast Asia, Northeast Asia, America and Europe, employing over 12,000 people worldwide. In its FY17 results and outlook:

  • As at the end of 1Q17, the Group had cash and bank balances of S$486.8 million (S$499.7 million as at 31 December 2016) and remained net cash positive at S$399.6 million (S$407.1 million as at 31 December 2016).
  • Management attributed profit growth to the Group’s ability to achieve compelling differentiation in product & services. For instance in its FY16 Annual Report (click here), Venture noted while its medtech, healthcare and life science-related business goes back many years, in recent years, it had more than doubled in terms of customer-base and product diversity. Management added the compelling differentiation is underpinned by well-regarded engineering and advanced manufacturing capabilities, sustained operational excellence, as well as its new product/programme execution with several customers.
  • The Group noted it remains vigilant of intense industry competition. To stay ahead, the Group will continue to execute with excellence in quality, productivity and value creation. For more on the results and outlook, click here.

The second largest capitalised stock of Singapore’s IT Sector is Silverlake Axis which has gained 7.9% in the YTD. Silverlake Axis creates technologies to enable the Digital Economy. As discussed here – Silverlake Axis maintains it has a distinguishing edge in its foundation for computing principles, which are grounded on mathematical models -  adding that through the years, Silverlake Axis has evolved using mathematics to refine, expand and invent technologies, broadening into new industries and markets at the same time.

Both Venture Corp and Silverlake Axis are constituents of the SGX Developed Asia Ex Japan Quality Index as discussed here

As tabled below, among the 10 largest stocks of Singapore’s IT Sector, Elec & Eltek International Company was the best YTD performer. On 9 April, its board of directors announced the group is expected to record a significant YOY increase of not less than 170% in net profit for 1Q17. Venture Corp, Silverlake Axis and Elec & Eltek International Company all maintain above average dividend yields, greater than 4.0%.  

For more information on each stock below in SGX StockFacts, click on the stock name.

10 Biggest Stocks of Singapore’s IT Sector

Name SGX
Code
Market Cap
S$m
Total
Return
MTD
%
Total
Return
YTD
%
Total
Return
1 Yr
%
Dvd
Ind Yld
%
ROE
%
ROE
5 Yr
Avg
%
Venture Corp V03 3,431 6.4 23.5 54.5 4.1 9.4 8.8
Silverlake Axis 5CP 1,495 -0.9 7.9 5.0 5.0 71.3 51.6
TPV Technology T18 868 0.0 48.0 107.1 1.8 2.3 1.5
Hi-P International H17 557 8.7 35.3 64.9 1.2 9.6 -3.0
UMS Holdings 558 410 11.7 56.6 67.4 5.2 11.8 14.7
Elec & Eltek Int Co E16 381 19.2 69.8 74.3 4.1 3.1 1.9
Valuetronics Holdings BN2 312 9.4 56.7 82.0 2.8 16.3 15.1
GP Industries G20 291 -1.6 2.6 1.6 N/A 4.4 6.0
CSE Global 544 268 -1.9 14.3 24.3 5.3 8.6 11.9
Chuan Hup Hldgs C33 237 -3.8 8.5 -6.9 3.9 4.8 6.6
Average 4.7 32.3 47.4 3.7 14.2 11.5

Source: SGX, Bloomberg & SGX StockFacts (data as of 28 April 2017)



As discussed above, the IT Sector was the best performer of the Sectors in the YTD on a market capitalisation and total return basis. The IT Sector was also the best performing Sector in the month of April. This  was the third consecutive month the Sector has led the overall market, as illustrated below.

Singapore’s Indicative Monthly Sector Total Returns (Capitalisation-weighted)


Source: SGX & Bloomberg.
Indicative GICS ® Sector performance weighed to market cap at each month end, in SGD and dividend inclusive.


The indicative sum of the best performing sector for each of the past 12 months was 81.2%. The 81.2% total return, weighed to market capitalisation, has seen the Information Technology Sector lead in five of the past 12 months. The combined decline for the least performing Sector of each of the last 12 months was 37.4%. These diverse Sector performances have exemplified how Sector rotation provided the opportunity for more risk and return within the Singapore market over the past 12 months.







This article is provided by SGX My Gateway.



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