Singapore's stock market has seen mixed returns across sectors post US-elections, with evidence of sector rotation to cyclical plays from less cyclical stocks.
Singapore’s Consumer Staples Sector has remained relatively resilient despite its defensive nature, averaging a total return of 0.9% in the month-to-date, in line with STI’s 1.0%, but outperforming the MSCI AC Asia Pacific Consumer Staples Index’s -4.0%.
The 10 biggest Consumer Staples stocks in Singapore have averaged a total return of 29.4% in the year to date. Consensus data suggests these companies are expected to grow earnings by 14.3% next year.
Sector Rotation in Play post-US Elections
After the conclusion of the US elections, the Singapore stock market has seen mixed returns across sectors. Specifically within the benchmark Straits Times Index (STI), sector performances have varied in the month-to-date, ranging from a 4.8% median gain by Singapore banks to a 12.0% median decline for Telecommunications Services. According to media reports, differences in the month-to-date returns may be attributed to investor fund flows rotating to cyclical stocks from less cyclical plays as the investment community expects inflation to pick up in the near term, once Trump implements widely anticipated pro-growth policies.
Consumer Staples Resilient in Near Term
The Consumer Staples Sector in Singapore has remained relatively resilient (despite the sector’s defensive characteristics), with a market capitalisation-weighted total return of 0.9% in the month-to-date, in line with STI’s 1.0% and outperforming the MSCI AC Asia Pacific Consumer Staples Index’s -4.0%.
On a year-to-date basis, the sector returned a market capitalisation-weighted total return of 25.8%, outperforming the flattish STI and MSCI AC Asia Pacific Consumer Staples Index’s 2.1% and -0.8% respectively. Consumer Staples has been the best-performing sector in the Singapore stock market in the year so far.
According to Global Industry Classification Standard (GICS®), the Consumer Staples Sector comprises companies whose businesses are less sensitive to economic cycles. GICS® characterises the Consumer Staples Sector stocks as manufacturers and distributors of food, beverages and tobacco and producers of non-durable household goods and personal products.
Strong Earnings Growth Expected Next Year
The 10 biggest Consumer Staples stocks in Singapore have a combined market capitalisation of approximately S$78.3 billion, trading at an average P/E of 21.8x, with an average dividend yield of 2.1%. Looking at current Bloomberg consensus data, the sell-side investment community expects these companies to grow their earnings per share (EPS) by an average 14.3% next year. This implies that these companies are trading at an average of 20.0x forward P/E. Within the cluster, sell-side analysts expect First Resources to post the highest growth for its forward EPS (47.8%), followed by Bumitama (44.6%), Wilmar (38.3%) and Thai Beverage (35.8%).
The 10 biggest Consumer Staples stocks are tabled below, sorted by market capitalisation. Click on the stock names below to see the full profile in SGX StockFacts.
Source: SGX, Bloomberg & SGX StockFacts (data as of 23 November 2016)
Source: SGX, Bloomberg & SGX StockFacts (data as of 23 November 2016)
Note that Jacobs Douwe Egberts B.V. made a pre-conditional offer to acquire Super Group from a group of shareholders for S$1.4 billion on 3 November 2016. Under the terms, Jacobs Douwe Egberts will acquire all the issued ordinary shares of Super Group for a cash price of S$1.30 per share. Click
here for details of the offer.
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