The Materials Sector has been Singapore’s second best performing Sector in the 2017 YTD with a market capitalisation-weighted average price gain of 31%. This compared to a 10% gain for the MSCI World Materials Index.
The YTD median gain of Singapore’s 10 largest capitalised Materials stocks was 5%, with a much higher average gain of 54%. Meanwhile, Singapore’s 10 largest capitalised Materials stocks that report the majority of their revenue to China generated a YTD median gain of 44% and average gain of 87%.
As many as seven of Singapore’s 10 largest capitalised Materials stocks with a China revenue focus reported 1HFY17 net profit growth. This ranged from +414% YoY net profit growth for Jiutian Chemical Group to +37.7% YoY net profit growth for Tat Seng Packaging Group.
The Materials Sector is represented by stocks that focused on turning raw materials into industrial inputs. This can involve exploration, development or processing activities. According to the Global Industry Classification Standard (GICS®) the Materials Sector includes companies that manufacture chemicals, construction materials, glass, paper, forest products and related packaging products, in addition to metals, minerals and mining companies that includes producers of steel.
Global Materials Sector Benchmark up 10% YTD in SGD terms
Globally the Materials Sector, as represented by the MSCI World Materials Index, has performed better than the broader market, as represented by the MSCI World Index. The 17.5% price return of the MSCI World Materials Index in the 2017 year through to 18 September is illustrated below. The 17.5% gain in USD terms, converts to a 9.5% price return in SGD terms.
2017 YTD Price Gains of MSCI World Materials Index
Source: MSCI Inc, Bloomberg (Data as of 18 September 2017)
The United States has as many as four stocks that make up the biggest 10 constituents of the MSCI World Materials Index. The three largest segments of the MSCI World Materials Index are Specialty Chemicals, Diversified Metals & Mining and Diversified Chemicals. Together these three sub-industries make up 52% of the MSCI World Materials Index.
The Index fact sheet can be found here.
Comparative YTD Gains of Singapore’s Biggest Materials Stocks
The Materials Sector is also made up of a large number of stocks that are non-mining plays or companies that have diversified their business lines over time such as The Straits Trading Company. Investors can generate a list of all 51 SGX-listed stocks representing the Materials Sector in SGX StockFacts, by selecting the criteria below.
The median gain of Singapore’s 10 largest capitalised Materials stocks in the 2017 year-to-date was 5%, with a much higher average gain of 54%. These 10 stocks are tabled below. To see the profile of each stock in SGX StockFacts, click on the stock name.
|Straits Trading Co||S20||979||2.450||-4.4||25.6||14.6|
|China Sunsine Chemical Hldgs||CH8||388||0.800||40.9||60.0||6.7|
|Kingboard Copper Foil Hldgs||K14||264||0.370||40.0||30.4||253.5|
|Wilton Resources Corp||5F7||175||0.070||13.8||9.1||N/A|
|Lee Metal Group||593||142||0.300||0.0||1.7||12.9|
|New Toyo International Hldgs||N08||116||0.260||38.1||-8.6||11.6|
Source: SGX Stockfacts and Bloomberg (Data as of 18 September 2017)
Singapore’s Largest China-Focused Materials Stocks
The 10 largest stocks of Singapore’s Materials Sector that report the majority of their revenue to China have generated an average gain of 86.8% in the 2017 year through to 18 September. Performances by Delong Holdings and Jiutian Chemical Group have skewed that average performance of the 10 stocks, with the median performance of the 10 stocks at 43.8%. Performances ranged from -37.8% for China Mining International to +450% for Delong Holdings.
These 10 largest stocks with a China-focus include four of the 10 largest capitalised stocks of Singapore’s Materials Sector: China Sunsine Chemical Holdings, Midas Holdings, Kingboard Copper Foil Holdings and Delong Holdings.
Recent Financial Reports
According to the latest earning releases, eight of the 10 largest stocks of Singapore’s Materials Sector that report the majority of their revenue to China reported a profitable 1HFY17. Of these eight companies, seven saw year-on-year (“YoY”) growth in 1HFY17 net profits:
- Jiutian Chemical Group reported the most profit growth with profit and total comprehensive income for its 1HFY17 at RMB 30.1 million, up 414% YoY from RMB 5.9 million in 1HFY16. The Group’s CEO attributed the improvement in results to an increase in both the sales volume and selling price of dimethylformamide (DMF) and Methylamine (click here).
- Midas Holdings reported 1HFY17 net profit of RMB 84.3 million, up 193.8% YoY. Midas Holdings noted that total revenue increased by approximately RMB 217.6 million or 31.7% YoY from RMB 686.4 million in 1HFY16 to RMB 904.0 million in 1HFY17. The increase was mainly due to the inclusion of the Aluminium Alloy Stretched Plates Division’s revenue of approximately RMB 186.2 million in 1HFY17.
- Delong Holdings reported 1HFY17 net profit growth of 102.3% YoY, from RMB 379.9 million in 1HFY16 to RMB 768.6 million in 1HFY17. Over the past twelve months, the Group has made both acquisitions and disposals, including the disposal of all equity interest in its Thailand production facility (click here), as well entering a joint venture with Shanghai Decent Investment Group and its subsidiary to invest in a steel factory in Indonesia (click here).
- Kingboard Copper Foil reported 2QFY17 net profit of HK$5.3 million, and 1QFY17 net profit of HK$5.0 million. This followed 2QFY16 net profit of HK$3.4 million and 1QFY16 net profit of HK$2.4 million. Its 2QFY17 net profit was up 59.2% YoY and 1QFY17 net profit was up 113.9% YoY.
- China Sunshine Chemical Holdings reported 59% YoY rise in net profit for its 1HFY17, to RMB 131.7 million. Revenue rose by 34% YoY, mainly because of the increase in overall average selling price.
- For its 1HFY17, Tat Seng Packaging Group reported net profit growth of S$7.9 million, up 37.7% YoY from S$5.7 million in 1HFY16.
- AsiaPhos reported a 1HFY17 profit after tax of S$912,000, a turnaround from a S$549,000 loss in 1HFY16. Overall revenue increased 143% YoY to S$28.2 million in 1HFY17, from S$11.6 million in 1HFY16. Note that total comprehensive income for 1HFY17 was a loss of S$129,000, due to a foreign currency translation loss. AsiaPhos is focused on exploring and mining phosphate in the Mainland China with the ability to manufacture and produce phosphate-based chemical products.
The 10 largest capitalised stocks that segment more than half their revenue to China are tabled below. To see the profile for each stock in SGX StockFacts, click on the stock name.
|China Sunsine Chemical Hldgs||CH8||388||0.800||40.9||60.0||6.7||69||Click Here|
|Midas Holdings||5EN||378||0.200||-25.9||-7.0||10.6||71||Click Here|
|Kingboard Copper Foil Hldgs||K14||267||0.370||40.0||30.4||257.7||100||Click Here|
|Delong Hldgs||BQO||160||1.600||-29.3||450.0||1.3||96||Click Here|
|Tat Seng Packaging Group||T12||105||0.660||16.7||57.1||6.4||85||Click Here|
|Jiutian Chemical Group||C8R||73||0.040||-47.8||250.0||14.0||100||Click Here|
|China Mining International||BHD||54||0.370||271.9||-37.8||N/A||100||Click Here|
|Southern Packaging Group||BQP||42||0.600||-3.3||3.5||5.3||92||Click Here|
|China Flexible Packaging Hldgs||BCX||20||1.250||57.3||65.6||N/A||100||Click Here|
Source: SGX StockFacts & Bloomberg (Data as of 18 September 2017)
In the table above, the three best price performers in the year to date were Delong Holdings (+450.0%), Jiutian Chemical Group (+250.0%) and China Flexible Packaging Holdings (+65.6%). This was a turnaround price performance in the 2017 year-to-date for Delong Holdings and Jiutian Chemical Group, which had respective price declines of -29.3% and -47.8% in 2016.
Did You Know?
The Materials Sector is classified by GICS® as a Cyclical Sector. Singapore’s Cyclical Sectors (Consumer Discretionary, Financials, Real Estate, Industrials, Information Technology and Materials) all performed better than the Defensive Sectors (Consumer Staples, Energy, Healthcare, Telecommunication Services and Utilities) over the first eight months of 2017.