SGX Market Updates

SGX Growth Stocks Edge Higher with Value Stocks in Early 2021


PUBLISHED ON |

21 January 2021

  • Singapore stocks that recently ranked highly for Growth Factor Exposure have kept pace, and been marginally stronger than Value stock counterparts in January (through to 21 Jan). The group of 20 Growth stocks averaged a 6% gain, compared to the 20 Value stocks averaging a 5% return.

  • In 2020, from April to Oct, the 20 Growth stocks doubled the returns of the 20 Value stocks, and outpaced the STI’s partial recovery. The 20 Growth stocks ranked highest in terms of 3 year sales per share and earnings per share growth with in a group of more than 100 actively traded Singapore stocks.

  • The strongest of the Growth stocks in the first 13 sessions in 2021 were AEM and UMS, averaging a 20% gain on S$40mil of net institutional inflow, while the strongest Value stock was Golden Agri-Resources with a 23% gain on S$7mil of net institutional inflow.




AEM & UMS Led Growth Stock Gainers in Early 2021

Over the first 13 sessions of 2021, Singapore’s Growth stocks have edged higher than Value stocks, with respective average gains of 6% and 5%. The 20 stocks that ranked highly for Growth factor exposure in mid-2020 maintain a combined market value of S$145bil and were recipient to S$333mil of net institutional inflow over the past 13 sessions, following S$1.15bil of net institutional outflow in 2020.

Leading the Growth stocks over the past 13 sessions have been AEM (SGX:AWX) and UMS (SGX:558) which have averaged 20% gains on net institutional flows close to S$40mil. Like the Philadelphia Semiconductor Index the two stocks have posted double digit gains in the month this far, coinciding with reports of demand for semiconductors by global car manufacturers outweighing supply.

While integrated circuits and semiconductors maintain an increasingly wide field of application, the Chairman and CEO of UMS Holdings did signal potential supply constraints last year, noting the resurgence of COVID-19, trade tensions and currency volatility meant the group would stay prudent and sharpen its production efficiencies and supply chain networks to cope with the challenges ahead.

Meanwhile, the strongest of the Value stocks over the past 13 sessions were Golden Agri-Resources (SGX:E5H) with a 23% gain on S$7mil of net institutional inflow. Golden Agri-Resources grew its revenue 6% y-o-y in its 9MFY20 (ending 30 Sep), reaching almost US$5bil, primarily attributable to higher average selling prices. However, third-quarter revenue saw a quarter-on-quarter decrease by seven percent due to lower sales volume.

While the weekly moves of the Golden Agri-Resources share price were 60% correlated to the price of Crude Palm Oil between 2016 and 2018, there was little correlation from the end of 2018 through to the end of 2020. The company noted in November that it had continued its sustainability programmes and initiatives despite the challenging situation due to the global pandemic. As of third quarter 2020, Golden Agri-Resources had achieved over 88% Traceability to the Plantation for its entire palm supply chain.

The 20 stocks that ranked highly for Value factor exposure in mid-2020 maintain a combined market value of S$104bil and were recipient to S$71mil of net institutional inflow over the past 13 sessions, following S$570mil of net institutional outflow in 2020. Proportionate to market value, the 20 Value stocks saw less net institutional outflows than the 20 Growth Stocks in 2020, while also seeing less net institutional inflow in the 2021 year-to-date.



Factor Exposures, Common Attributes and Differences in 2020 Returns

Of the 20 stocks that ranked highest for Growth factor exposure, 6 of the stocks also ranked among the 20 stocks with the highest Value factor exposure. These were Hong Fok Corp (SGX:H30), Olam International (SGX:O32), China Everbright Water (SGX:U9E), China Sunsine (SGX:QES), Sasseur REIT (SGX:CRPU) and Yangzijiang Shipbuilding (SGX:BS6). Of the 6 stocks, the latter 4 stocks are also constituents of the FTSE ST China Index. Hong Fok Corp, Sasseur REIT and China Sunsine also ranked among the 10 stocks with the highest Multi-Factor exposure.

The Factor Investing in Singapore Report by Nicolas Rabener and supported by Singapore Exchange was published last year and based on all available information collected on more than 100 stocks through to 30 June 2020 (click here for full report).


Factor investing is a relatively new method of grouping that looks to link past and potential performances of stocks according to common factor attributes:

  • Value stocks typically have the most inexpensive valuations or lowest valuations in terms of a screening, which in this case applied an equal-weight combination of price-to-book (P/B) and price-to-earnings (P/E) multiples.

  • Growth stocks typically display earnings growth and the two growth metrics used by FactorResearch for selecting stocks with Growth Factor exposure include 3-year sales-per-share and earnings-per-share growth.



As shown in the table below, the Growth stocks outpaced the Value stocks for much of the year, during the tentative recovery in April, which then extended to a partial recovery through to the end of October. During that seven months, the 20 stocks with the most Growth attributes doubled the returns of the 20 Singapore stocks with the most Value attributes.

Total Returns 31-Dec19
To 23-Mar-20
23 Mar-20
To 30-Oct-20
30-Oct-20
To 6-Nov-20
6-Nov-20
To 31-Dec-20
2021 YTD
STI -30% 12% 6% 11% 5%
iEdge S-REIT Index -33% 33% 6% 4% 5%
Growth Stocks (Median) -33% 21% 3% 8% 5%
Value Stocks (Median) -34% 16% 1% 8% 4%
Growth Stocks (Average) -33% 32% 3% 11% 6%
Value Stocks (Average) -33% 17% 1% 11% 5%

Source: SGX StockFacts, Refinitiv and Bloomberg (Data as of 20 January 2021)



The big moves down in March, then up in November, saw little difference in the performance of the two different styles of stocks - Growth and Value. This meant that in Singapore and globally, Growth stocks outperformed Value stocks in 2020. However, for the first 2 weeks of 2021, like the last two months of 2020, there has been little difference in the performance of Growth and Value stocks in Singapore.

The performances of each of the 20 Growth stocks and Value stocks are tabled below, with the first table sort by the highest Growth factor exposure and the second table sort by the highest Value factor exposure.



20 SGX Listed Stocks that Ranked Highest for Growth Exposure

Top 20 SG Growth Stocks SGX
Code
Mkt Cap
S$mil
2020
Total Return
2021 YTD
Total Return
2020 Net
Institution Flow
S$mil
2021 YTD Net
Institution Flow
S$mil
AEM AWX 1129 75% 19% 16.4 24.6
Cosco Shipping International F83 661 -15% 5% -2.2 -0.4
BRC Asia BEC 367 3% 6% 1.3 -1.3
Dasin Retail Trust CEDU 591 -1% -3% -1.2 -0.2
China Everbright Water U9E 672 -25% 4% -13.3 -2.3
GSH Corp BDX 389 -46% 6% 0.3 0.0
PropNex OYY 298 62% 3% 2.5 -1.1
Sasseur REIT CRPU 983 0% -1% -35.2 -2.7
Yangzijiang Shipbuilding BS6 4195 -11% 14% -172.8 43.1
Frencken E28 611 47% 8% 9.9 5.2
Hong Fok Corp H30 600 -5% -4% 6.1 -1.4
UOL U14 6507 -5% 0% 43.5 -5.5
Lippo Malls Indonesia Retail Trust D5IU 204 -67% 10% -14.9 0.5
Keppel Pacific Oak US REIT CMOU 881 -8% 3% -11 -1.8
China Sunsine QES 466 -1% -3% -0.7 -1.4
DBS D05 67297 2% 5% -605.8 170.1
Olam International O32 5241 -11% 7% -29.8 3.9
Venture Corp V03 5933 25% 5% 168.6 3.0
UMS 558 693 10% 20% 18.6 15.0
OCBC O39 47422 -4% 5% -531.8 86.2
Median -3% 5%
Average 1% 6%

Source: SGX StockFacts, Refinitiv and Bloomberg (Data as of 20 January 2021).



20 SGX Listed Stocks that Ranked Highest for Value Exposure

Top 20 SG Value Stocks SGX
Code
Mkt Cap
S$mil
2020
Total Return
2021 YTD
Total Return
2020 Net
Institution Flow
S$mil
2021 YTD Net
Institution Flow
S$mil
Yanlord Land Z25 2202 -2% 2% -19.4 -9.3
Hutchison Port Holdings Trust NS8U 2597 24% 14% -3.7 -1.7
China Everbright Water U9E 672 -25% 4% -13.3 -2.3
Hong Fok Corp H30 600 -5% -4% 6.1 -1.4
OUE LJ3 1032 -16% -3% 1.3 -0.3
GuocoLand F17 1952 -19% 8% -11.3 0.1
Frasers Property TQ5 3726 -25% 2% -8.1 -1.2
Yangzijiang Shipbuilding BS6 4195 -11% 14% -172.8 43.1
China Sunsine QES 466 -1% -3% -0.7 -1.4
Golden Agri-Resources E5H 2488 -30% 23% -9.1 6.5
Tianjin Zhongxin Pharmaceutical T14 2295 7% 3% -10.5 -0.6
CapitaLand C31 17812 -9% 5% -58.7 32.2
Asian Pay TV Trust S7OU 210 -23% -3% -5.2 -1.6
SPH T39 1942 -47% 8% -204.8 7.8
BHG Retail REIT BMGU 299 -16% 6% 15.2 0.0
Jardine Matheson J36 54782 3% 1% -2.2 -0.5
Olam International O32 5241 -11% 7% -29.8 3.9
Oxley 5UX 974 -35% 7% -0.2 0.2
Sasseur REIT CRPU 983 0% -1% -35.2 -2.7
Chip Eng Seng C29 345 -24% 0% -7.8 -0.1
Median -14% 4%
Average -13% 5%

Source: SGX StockFacts, Refinitiv and Bloomberg (Data as of 19 January 2021).



As noted above, the above Growth and Value stocks include 3 stocks that also rank among the 10 highest stocks for multi-factor exposure which includes Size, Momentum, Low Volatility, Quality and Dividend Yield.

  • Hong Fok (SGX:H30),
  • Sasseur REIT (SGX:CRPU) and
  • China Sunsine (SGX:QES).


Quality exposure can also be used in conjunction with value exposure in order to attempt avoiding so-called Value traps. Of the 20 stocks with the highest Value exposure tabled above, the following 7 stocks also ranked among the 50 stocks with the highest Quality factor exposure.

  • Hong Fok (SGX:H30),
  • Yangzijiang Shipbuilding (SGX:BS6),
  • China Sunsine (SGX:QES),
  • Tianjin Zhongxin Pharmaceutical (SGX:T14),
  • BHG Retail REIT (SGX:BMGU),
  • Jardine Matheson (SGX:J36) and
  • Sasseur REIT (SGX:CRPU).






This article is provided by SGX My Gateway.



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