Top 20 manufacturing stocks up by 37% so far

Singapore's top 20 regained lost ground from last year as stocks such as Yangzijiang Shipbuilding, Sembcorp Marine, BRC Asia and ISDN reversed declines, SGX said on Tuesday.
Singapore's top 20 regained lost ground from last year as stocks such as Yangzijiang Shipbuilding, Sembcorp Marine, BRC Asia and ISDN reversed declines, SGX said on Tuesday.ST FILE PHOTO

Aerospace and defence, building products, electrical equipment among biggest gainers

Singapore's largest manufacturing stocks have picked up momentum sharply this year and despite popular perception, many of the factories riding high are not electronics manufacturers.

The 20 biggest aerospace and defence, building products, electrical equipment and machinery stocks listed here have averaged a sizzling 37 per cent price gain so far this year, the Singapore Exchange (SGX) said in a market update.

This is far better than the 4.1 per cent price gain they averaged in all of last year. In contrast, the 20 largest stocks by market cap in the Asia-Pacific, including China, in the same manufacturing segments delivered an average price gain of 8 per cent last year.

This year, however, Singapore's top 20 regained that lost ground - and some - in the year up until Monday, as stocks such as Yangzijiang Shipbuilding, Sembcorp Marine, BRC Asia and ISDN reversed declines, SGX said on Tuesday. The price gains made by the Asia-Pacific's top 20 over that period were lower, averaging 10.8 per cent.

In its comparison, SGX chose to focus on the industrials sector, excluding electronics-makers such as Venture, which fall under the information technology sector.

Under the industrials sector, SGX screened for capital goods counters, but excluded industrial conglomerates like Jardine Matheson Holdings, Jardine Strategic Holdings and Keppel.

ST Engineering is one of only two aerospace and defence companies on the list of the Asia-Pacific's top 20 capital goods manufacturers. While its market cap is similar to China-listed aircraft engine manufacturer AECC Aviation Power, ST Engineering has outperformed both last year and this year, SGX said.

Starburst Holdings, which designs firearms training facilities, was the best-performing stock on the Singapore list, posting a 115.7 per cent price gain so far this year. It pulled off a turnaround in the last quarter, with a net profit of $212,000.

"The Asia-Pacific is the fastest-growing region in terms of defence spending," Starburst said in its results filing last week, adding that it is actively responding to tenders for firearms training facilities as the authorities worldwide respond to the threat of terrorism.

Shares in Frencken Group, a precision engineering company that also runs a smaller plastic injection moulding division, have gained 114.6 per cent this year.

Frencken posted a 62 per cent jump in net profit to $6.6 million in the last quarter on higher sales from the semiconductor segment.

KGI analyst Joel Ng on Tuesday raised his 12-month target price to 73 cents, implying a 40 per cent upside.

He noted Frencken's improving gross margins, revenue resilience due to a diversified business mix and a potential for higher dividends.

A version of this article appeared in the print edition of The Straits Times on August 17, 2017, with the headline 'Top 20 manufacturing stocks up by 37% so far'. Print Edition | Subscribe