SGX Market Updates

SGX’s 3 Largest Water Plays Averaged 24% Total Return in 2019 YTD


PUBLISHED ON |

13 March 2019

  • Utilities was the second-best performing sector on SGX in Feb, with a total return of 7.4%, after IT sector’s 14.5% total return. Utilities also saw net inflows of S$1.5 million from institutional investors, the second straight month of net inflows after S$7.0 million in Jan.

  • SGX lists 10 stocks that provide infrastructure for water, wastewater treatment and supply services, and they have a combined market capitalisation of nearly S$10 billion. 

  • In the 2019 YTD, the 3 largest capitalised, best-performing water plays were: SIIC Environment (+34.5%), CITIC Envirotech (+18.4%), and China Everbright Water (+18.3%). The trio, which are focused on China’s water sector, averaged a total return of +23.8% in the YTD.




Second-Best Performer in Feb

Utility stocks maintain infrastructure that supply water, electricity, gas and waste removal services, with population growth the underlying driver of demand for these services.

For the month of February, Utilities was the second-best performing sector on SGX with a total return of 7.4%, after Information Technology’s 14.5% total return. Utilities also saw net inflows of S$1.5 million from institutional investors in February, the second straight month of net inflows after S$7.0 million in January.


SGX Water Utilities Stocks Return



Water Infrastructure Plays on SGX

SGX lists 10 stocks that provide infrastructure for water as well as wastewater treatment and supply services, and they have a combined market capitalisation of nearly S$10 billion. Among the 10, the 5 largest capitalised water infrastructure plays are: Sembcorp Industries, Keppel Infrastructure Trust, CITIC Envirotech, SIIC Environment and China Everbright Water.

In the 2019 year-to-date, the 3 largest capitalised, best-performing water stocks were: SIIC Environment (+34.5%), CITIC Envirotech (+18.4%), and China Everbright Water (+18.3%). The trio averaged a total return of +23.8% in the YTD, bringing their one-year and three-year total returns to -26.8% and -34.7% respectively. They also average a dividend yield of 3.3%.

These 3 stocks focus on China’s water sector, and specialise in environmental water services that include building and managing water and wastewater treatment plants, water supply and recycling, seawater desalination, sludge treatment, as well as development of other water technologies.

The table below details the 10 water infrastructure plays listed on SGX, sorted by market capitalisation.

Name SGX
Code
Market
Cap
S$m
Total
Return
YTD
(%)
Total
Return
1Y
(%)
Total
Return
3Y
(%)
Div
Yld
(%)
ROE
(%)
SEMBCORP INDUSTRIES U96 45,678 0.8 -15.2 -9.3 1.6 4.1
KEPPEL INFRASTRUCTURE TRUST A7RU 1,929 5.0 -5.7 27.6 7.4 -0.2
CITIC ENVIROTECH CEE 1,090 18.4 -34.3 -32.7 1.7 7.0
SIIC ENVIRONMENT BHK 964 34.5 -28.7 -43.7 5.4 6.5
CHINA EVERBRIGHT WATER U9E 950 18.3 -17.3 -27.7 2.8 8.6
MOYA HOLDINGS 5WE 307 4.3 -18.0 87.2 NA 12.9
SANLI ENVIRONMENT 1E3 52 -2.5 -26.9 NA 1.3 17.1
CHINA INTERNATIONAL BEH 39 31.0 32.5 624.6 NA 4.5
DARCO WATER TECHNOLOGIES BLR 33 -30.0 -22.2 59.1 NA -5.0
C&G ENVIRONMENTAL D79 15 25.0 0.0 -27.3 NA NA

Source: Bloomberg & StockFacts (data as of 11 March 2019)



China’s Water Market

With nearly 20% of the world’s population and only about 6% of global freshwater resources, China’s water sector is a high priority for the country’s policy makers. With the government’s push towards environmental protection, demand for wastewater treatment facilities has increased across all sectors. Demand among industrial users has also been strong, due to more stringent environmental regulation and enforcement. In its 13th Five Year Plan, China aims to spend around RMB 559 billion (US$83 billion) – or about 0.75% of its GDP – on its water treatment industry.

According to data from Research and Markets, the Chinese wastewater treatment market is forecast to reach US$58.2 billion by 2022, from US$42.1 billion in 2017, reflecting a compound annual growth rate (CAGR) of 6.7% over the period.







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