Small-cap consumer staples stocks put up stellar showing

Three of the five best performers on the FTSE ST Small Cap Index came from this sector: Best World International, Japfa and Super Group.
Three of the five best performers on the FTSE ST Small Cap Index came from this sector: Best World International, Japfa and Super Group.PHOTO: JAPFA

They outperform those from other sectors this year, says SGX report

Consumer staples stocks in the small-cap category have outperformed those from other sectors this year, according to a Singapore Exchange (SGX) My Gateway report yesterday.

Three of the five best performers on the FTSE ST Small Cap Index came from this sector: Best World International, Japfa and Super Group.

The trio made an average total return of 176.7 per cent to Dec 21 - led by Best World, with a 377.5 per cent gain. Its total return over the past three years is a staggering 826.6 per cent. Japfa is up by 96.1 per cent this year and Super by 56.4 per cent.

The consumer staples sector's outperformance "reflects the industry's continued momentum, which began in late November", said the SGX My Gateway report.

Consumer staples stocks are focused on food, beverage and other non-durable products and services, such as plantations, manufacturers and packagers, and food retailers.

KGI Securities Singapore trading strategist Nicholas Teo noted that consumer staples is a category that traditionally does well when the economy is in a sluggish mode.

  • 176.7 %

    Average total return of three of the five best performers on the FTSE ST Small Cap Index - Best World International, Japfa and Super Group.

"In times like this, consumers generally tend not to spend on luxuries but stick to staples, and those names - Best World, Japfa and Super - all fall into that group."

Mr Teo added that the performance of some of the stocks may have been due to corporate activity.

Super shares, for instance, surged last month on news that the instant food and beverage manufacturer is being taken private in a $1.45 billion takeover bid by Dutch tea and coffee group Jacobs Douwe Egberts.

"If nobody took Super over, it may not see the revaluation in price," said Mr Teo.

That said, small caps as a whole appear to have done less well. The FTSE ST Small Cap Index - which represents the performance of small-cap companies listed on the SGX mainboard - is down 1.34 per cent since the start of the year.

This is in contrast to the MSCI AC Asia-Pacific Small Cap Index, which had a total return of 4.9 per cent in Singapore dollar terms as at Dec 21. The benchmark Straits Times Index is up 0.66 per cent.

"Considering the decline in small caps that we've seen in the last three years, after the 2013 penny stock crash, there's a bit of stabilisation here," said Mr Teo. "It's also not too far from from the STI's (Straits Times Index) performance, which is actually a relief."

The FTSE ST Small Cap Index, comprising 64 constituents, has a combined market cap of $35.5 billion. The remaining two of the five overall best performers on the index are Geo Energy Resources (+60.7 per cent) and PEC (+51.2 per cent).

The five worst-performing stocks on the index are OKH Global (-90.7 per cent), Nam Cheong (-55.6 per cent), Pacific Radiance (-53.5 per cent), Ezra Holdings (-51.7 per cent) and Swiber Holdings (-48.1 per cent), which filed for judicial management in July.

A version of this article appeared in the print edition of The Straits Times on December 23, 2016, with the headline 'Small-cap consumer staples stocks put up stellar showing'. Print Edition | Subscribe