• Together, AEM, UMS, Frencken, Valuetronics and Hi-P averaged 7% gains last week, bringing their combined average 2019 YTD total return to 82% (median 74%). Globally, the largest 100 stocks by market value across the same industries have generated a 40% median YTD total return.

• Together the 5 Singapore stocks averaged a combined S$43.62M a day in turnover last week, up from S$21.97M a day in the first 10 months of 2019, and up from S$18.62M a day in 2018. Combined net institutional inflows for the five stocks is S$140 million in the 2019 YTD.

• The 4 of the 5 stocks that reported YoY profit growth for the recent Sept Quarter saw their turnover surge last week - results ranged from Frencken’s net profit +113% YoY, to Hi-P’s net profit -3% YoY. AEM, UMS & Valuetronics averaged +23% YoY net profit growth for the Quarter.

Globally, the share prices of stocks focused on hardware, semiconductors and manufacturing of electronic components have outpaced most sectors and benchmarks. The relevant 100 largest global stocks by market value, with Apple Inc the largest, have generated an average 60% total return in the 2019 year-to-date. Median total returns which are subject to less skewing by outlier performances, have also been comparative high at 40%. By comparison the big global, multi-country, multi-sector benchmarks are up around 20%. 

Singapore’s Most Traded Hardware, Semiconductors and Electronic Component Manufacturer Stocks

Singapore’s five largest stocks by market value, that represent companies focused on hardware, semiconductors and manufacturing of electronic components, have also been comparatively strong in the 2019 year-to-date. Over the past 46 weeks, the average and median total returns of these five stocks was 82% and 74% respectively.

The 5 Singapore stocks include Hi-P International (“Hi-P”), UMS Holdings (“UMS”), AEM Holdings (“AEM”), Frencken Group (“Frencken”) and Valuetronics Holdings (“Valuetronics”). Note while Elec & Eltek has a larger market value than Valuetronics, it has maintained dual-listed status in Hong Kong since 2011.

Source: Thomson Reuters, Bloomberg (Data as of 15 November 2019)

In addition, AEM, UMS, Frencken, Valuetronics and Hi-P are Singapore’s most traded stocks as gauged by average daily trading value (also referred to as turnover) within the group of stocks that span hardware, semiconductors and electronic component manufacturing in the 2019 year-to-date.

Strong Growth in Turnover & Market Participation

AEM, UMS, Frencken, Valuetronics and Hi-P were all amongst Singapore’s 50 most actively traded stocks by turnover last week, with a combined average daily turnover of S$43.62 million. 

Source: Singapore Exchange, Thomson Reuters, Bloomberg (Data as of 15 November 2019)

On the back of a global rally in technology stocks in 2017 predicated by sector-wide re-ratings, AEM, UMS, Frencken, Valuetronics and Hi-P all generated triple digit total returns for that year. However, by comparison, the turnover of the five stocks combined in 2017 was S$8.09 million a day.

In the 2018 year, the 5 stocks saw on average a 26% decline in total returns, however significantly larger daily trading ranges of the 5 stocks saw their combined turnover markedly increase. In 2018, the average daily turnover of the five stocks more than doubled to S$18.62 million a day.

The turnover growth of the 5 stocks has continued into 2019, with the turnover of the 5 stocks averaging S$21.97 a day over the first 10 months of 2019. And last week, the aforementioned surge in the turnover of the 5 stocks increased the 2019 year-to-date combined turnover of the five stocks to S$23.11 million a day.

Source: Singapore Exchange (Data as of 15 November 2019)

Key Business Drivers & Recent Strategic Moves

All 5 stocks have reported their financial results for the last quarter, which can be read via the links in the above table. While the majority of the stocks cite the protracted trade war and geopolitical tensions as a business challenge, they have also provided updates on current opportunities. Amongst the commentary relating to their trends in hardware, semiconductors and electronic component manufacturing, some key observations were as follows:

• For AEM’s business, the Executive Chairman Loke Wai San commented that as the interconnected 5G and data-centric worlds gather momentum, the industry has become increasingly aware of the significance and benefits of system level testing.

• UMS Executive Chairman and CEO Andy Luong noted that the industry is now witnessing signs of an upturn in the overall semiconductor industry as demand is picking up with chip inventories easing and new technological disruptors driving the growth of new products and capabilities.

• Frencken noted that In the long term, the Group believes the global technology sector will continue to benefit from the positive market trends in cloud computing, big data, artificial intelligence, the Internet of Things and life sciences.

• Valuetronics management noted that in anticipation of customers’ changing needs in this challenging environment, the Group had in early 2019 embarked on an expansion plan to expand its manufacturing footprint to Vietnam to provide customers with an alternate manufacturing platform outside China. The Group’s reiterated its first leased manufacturing facility in Vietnam had begun mass production in June 2019 and shipments have since been made from Vietnam to the US market.

• Hi-P noted that while the trade war outcome remains uncertain, Hi-P has moderated its impact. Hi-P has continued its effort in diversifying regional markets and product mix, exploring suitable merger and acquisitions, opportunities, computerising system flows with the aid of artificial intelligence, improving automation initiative, diversifying process abilities etc. The proposed acquisition of South East Asia Moulding Company Pte. Ltd. as announced by the Company on 8 October is a strategic move by the Company to penetrate into new customer, increase its product offering and strengthen technological capabilities.