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Electrical Equipment companies average 16.6% YTD gain

My Gateway (92 x 92) There are common themes that link together the stocks from different industries and sectors across Asia. An example of this was the Mineral, Oil & Gas companies which averaged 6% gain in August as discussed last week. This week we turn to a group of 18 SGX Mainboard companies which derive more than 10% of revenue from providing electrical equipment. These 18 companies mostly come from the Industrial and Technology sectors as defined by the Industry Classification Benchmark (ICB). Understanding these different segments of the stock market can assist investors who want to re-balance their investment portfolios based on the principles of diversification.

In the 2013 year-to-date, these 18 companies have averaged a 16.6% gain, while the average total return (which includes dividend distributions) was 21.0%. Of the 18 companies, 13 companies gained in the year-to-date and five companies declined in the year-to-date. Price performances ranged from an 88.5% gain for Devotion Energy to a 45.2% decline for Surface Mount, the latter of which is currently on the SGX Watch List. In addition to the 18 SGX Mainboard companies, there are 11 companies listed on Catalist that derive more than 10% of their revenue from providing electrical equipment. There are also two inactive cross listings, Murata Manufacturing Corporation and Maruwa Corporation that are a part of the electrical equipment genre.

The immediate product or service associated with electrical equipment is typically components, i.e. batteries, transformers and capacitors. This is not far off the type of products made by electrical equipment companies. These companies produce equipment including electrical components, power generation equipment, power transmission equipment, measurement instruments, industrial automation controls and commercial and residential building equipment. The product most associated with the relevant 18 Mainboard companies is electrical components. In the last financial year, 14 of the 18 companies reported revenues from electrical components with percentages to total revenue ranging from 100% for three companies, of which Hu An Cable Holdings (SGX:KI3) had the highest market capitalization, to 11.2% for CDW Holdings (SGX: D38).

The individual price performances of the 18 Mainboard companies are detailed in the table below. Please note that Europtronic Group has announced a Mineral, Oil & Gas transaction which upon completion will make it an Mineral, Oil & Gas company.

Short Name SGX Code Market Cap S$M Px Chg Pct YTD Electrical Equipment Revenue Percent Last FY Dvd 12M Yld – Gross Total Return YTD
SARIN TECHNOLOGIES

U77

492

43

100

6.4

49.3

CHUAN HUP HLDGS

C33

257

5.8

94

3.6

5.8

GP INDUSTRIES

G20

252

25

25

9.0

32.7

TAI SIN ELECTRIC

500

131

22.4

61

7.5

25.7

HU AN CABLE HLDS

KI3

123

-2.4

100

N.A

-2.4

FRENCKEN GROUP

E28

101

35.1

75

2.0

38.7

KARIN TECHNOLOGY

K29

79

32.1

17

6.2

36.8

CDW HOLDING

D38

74

58.6

11

9.7

75.1

HENGXIN TECH

I85

62

13.6

100

N.A

13.6

BH GLOBAL CORP

B32

58

-34.8

97

4.2

-32.7

EXCELPOINT TECH

E17

45

46.7

100

9.1

60.8

EASTGATE TECH

N0L

41

-10.5

52

N.A

-10.5

EUROPTRONIC GRP

E23

36

17.5

22

N.A

17.5

DEVOTION ENERGY

D08

29

88.5

100

3.4

96.6

PNE INDUSTRIES

P07

27

-10

100

4.9

-6.3

SHANGHAI TURBO

X27

24

11.3

100

5.7

17.6

SURFACE MOUNT^

Q7Q

20

-45.2

78

N.A

-45.2

CHINASING INVEST

O2R

5

2.5

88

2.93

5.2

Source: Bloomberg (Data as of 6 September 2013), note: ^ on SGX Watch List

 Of the 18 Mainboard companies, the biggest in market cap terms is Sarin Technologies (SGX: U77)  which develops technology intensive products for diamonds and precious stone processing. The company is sub categorised by ICB to Industrial Machinery and the company’s revenue in the last financial year was categorised to measurement instruments by Bloomberg analytics. The second-biggest company by market cap is Chuan Hup Holdings (SGX: C33), an investment holding company with a diversified portfolio of core investments that spans the oil & gas, property and electronic manufacturing services. The latter business stream, electronic manufacturing services, accounted for more than 90% of FY2012 revenue.

The third largest company is GP Industries (SGX: G20) which as of 26 August held an approximate 50% interest in GP Batteries International. GP Industries is an international manufacturing and marketing group in the electronics and batteries industries. Note that Bloomberg analytics categorised the majority of GP Industries product revenue in FY2013 to electronics & acoustics. Note that the revenue of GP Batteries International is categorised by Bloomberg as household products manufacturing rather than electrical equipment.

Different price performances of stocks and sectors infer investors must choose investments carefully. One way to exercise care is to avoid putting all the eggs in one basket. For stocks and sectors, this means avoiding putting all funds in one single stock or sector, rather building a portfolio that is diversified with a number of different businesses and sectors.

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