Largest 10 construction stocks averaged 15.5% gain ytd: SGX Gateway

The largest 10 stocks grouped to Constructions & Materials averaged a 15.5% gain in the year-to-date, says SGX in a My Gateway update email which was sent to subscribers on Jul 8.

• The Constructions & Materials supersector is one of just two supersectors that make up the large group of stocks known as Industrials, according to the Industry Classification Benchmark (ICB). Within the Constructions & Materials Sector, focus of a company is either:
• Building Materials & Fixtures, i.e. producers of materials used in the construction and refurbishment of buildings and structures; or
• Heavy Construction, i.e. engaged in the construction of commercial buildings or infrastructure such as roads and bridges, residential buildings and construction company services.

The largest stock in terms of market capitalisation in the Constructions & Materials Sector is Yoma Strategic Holdings which generated all its FY2013 and FY2012 revenue in Myanmar. The largest component of Yoma’s operations in Myanmar is real estate developments.

Yoma Strategic is also one of the ten largest stocks of the FTSE ST Small Cap Index and accounted for 2.6% of this Index market capitalisation at the end of June. There are a total of 14 Construction & Materials stocks that make up 11.5% of the capitalisation of the FTSE ST Small Cap Index.

 

The second largest stock of the sector in terms of market capitalisation is Guthrie GTS which is also a member of the FTSE Small Cap Index, with a smaller 1.0% Index weighting. In FY2012, Guthrie GTS reported that 83% of its revenue was generated in Singapore, 15% in Indonesia and 2.0% in other countries. Guthrie GTS is involved in property development, engineering services and leisure investments.

The third largest stock of the sector is United Engineers. United Engineers is the sole representative stock of Constructions & Materials Sector in the FTSE ST Mid Cap Index, with a 0.9% Index weighting. United Engineers generated 54% of its FY2012 revenue in Singapore and 46% of its FY2012 revenue from other ASEAN countries. United Engineers was formed in 1912, with its current business focus in engineering, construction and integrated property services.

The past volatility of the 10 stocks relative to the Straits Times Index (STI) can be gauged by historical beta. The historical beta ratios (detailed in the table above) measured the average percentage returns of each stock relative to a 1.0% change in the STI over the past 12 months. Stocks with a higher beta than 1.0% were more volatile than the STI, and stocks with a beta lower than 1.0%, rose or fell more slowly than the STI.

There are a total of 60 stocks listed on Singapore exchange that make up the ICB Construction & Materials Sector with a combined market capitalisation of S$10.7 billion. Among the ten biggest companies of the sector, year-to-date price performances ranged from -27.6% for United Engineers to +43.8% for Yongnam Holdings. Across the ten largest stocks, the average price gain performance was a 15.5% gain. The three largest stocks of the Construction & Materials sector account for a quarter of the Sector’s market capitalisation with various revenue streams in Asean.