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The Industrial Sector – Industrial Goods & Services Part I

Construction logo In our previous article of this Sector Connect – Industrials series, we looked at the “Construction & Materials” supersector . From this article on, we will delve into the “Industrial Goods & Services” supersector.  According to the Industrial Classification Benchmark (ICB),  this supersector consists of 6 sectors.  In this article, we’ll take a closer look at the “Aerospace & Defence” and “General Industrials” sector.

The companies under the “Aerospace & Defence” sector are involved in the manufacturing, assembling and distributing of aircraft and its parts mainly used in private or commercial air travel. They can also be producers of components and equipment for the defence industry.

On the other hand, companies under the “General Industrials” sector are involved making and distributing of packaging items like cardboards, boxes, drums or are conglomerates engaged in three or more classes of business within the Industrial sector.

We will look at three such companies listed in SGX. The first company, Singapore Technologies Engineering Limited (SGX: S63), or ST Engineering, is involved in the “Aerospace & Defence” sector while the other two, Goodpack Limited (SGX: G05) and Jardine Strategic Holdings (SGX:J37) are from the “General Industrials” sector.

ST Engineering has a number of subsidiaries that include ST Aerospace, ST Electronics, ST Kinetics and ST Marine. The company’s aerospace arm is the world’s largest Maintenance, Repair and Overhaul (MRO) and is the Authorised Maintenance Centre for C130, Fokker 50 and Super Puma helicopters of the Singapore Armed Forces. Some of the weapons and vehicles produced by ST Kinetics include the locally license-built Colt M-16S1; Singapore Assault Rifle – 21st Century (SAR21) and BIONIX Infantry Fighting Vehicle.

Goodpack is the world’s largest provider of returnable and environmentally-friendly Intermediate Bulk Containers (IBCs) and is a local company to boot. Goodpack operates the world’s largest fleet of over 2.6 million steel IBCs, each of which can hold 1.5 tons of goods, leased to major customers in diverse industries like the rubber and tire, food and chemical industries. Goodpack IBCs are used in over 70 countries and more than 5000 locations worldwide.

Jardine Strategic is a sprawling conglomerate with its fingers in many different pies. The company has substantial interests in its group members Jardine Matheson, Hongkong Land, Dairy Farm, Mandarin Oriental, and Jardine Cycle & Carriage, covering the real estate, food and retail, hospitality, and automotive industries. While shares of the company might be high, at US$32.29 (as of 4th September 2013), shares of the company have also provided more than 1,000% return  over the past 10 years.

Company

Market Cap (S$’ M)

Net Profit Margin (%)

Return on Equity (%)

PE

Dividend Yield (%)

Singapore Technologies Engineering Limited

(SGX: S63)

12,291.2

9.0

30.4

21.3

1.8

Goodpack Limited (SGX: G05)

926.4

26.9

14.8

14.3

1.2

Jardine Strategic Holdings (SGX: J37)

36,374.6

5.6

8.6

19.8

0.7

(As of time of writing on 3rd September 2013)

Other companies in the “General Industrials” sector include Fraser and Neave (SGX: F99) and Noble Group (SGX: N21). In the next article, we will look at two other sectors in the “Industrial Goods & Services” supersector.

You can find earlier articles in this series here and here.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.