Singapore’s Food Producers To Watch

The food sector is one of more interesting categories in the Singapore market, and that’s not just because I love to eat. The players range from the S$2 billion chocolate giant Petra Foods (SGX: P34) to the considerably smaller China Dairy Group (SGX: T16), which is worth S$50m.

In the main, Singapore food producers are quite profitable, though the margin is lower than the average for the Singapore market. On average the Net Income Margin for the 30 companies that make up the Straits Times Index (SGX: ^STI) is around 19%. The median Net Income Margin for food companies is about half that, but still an appetising 7%.

The average Asset Turnover, which is the amount of revenue the food producers generate for every dollar of asset employed, is a tasty 1.1. In other words, they produce $1.10 of sales for every dollar of asset used. Additionally, Singapore food producers are, by and large, not excessively leveraged. The Leverage Ratio is an undemanding 1.7.

Instant coffee maker Super Group (SGX: S10) and Yeo Hiap Seng (SGX: Y03) are notable standouts in terms of profitability. Super Group has over the last three years achieved a Net Income Margin of between 14% and 16%. Meanwhile, Yeo Hiap Seng’s has lifted its margin from 6% in 2010 to 12% last year.

From a shareholder perspective, four companies stand head and shoulders above the others. Petra Foods has delivered a total return of 64% a year over the last five years. Shareholder favourite Super Group has seen its shares increase from a dividend-adjusted S$0.35 in 2005 to S$3.40 today. That equates to a total return of around 57%.

Elsewhere, ice cream specialist ABR Holdings (SGX: 533) has seen its shares increase eight fold on a dividend-adjusted basis since 2008 and bread maker QAF (SGX: Q01) has delivered a total annual return of 43% over five years.

But it has not all been good news for food producers. Oceanus Group (SGX: 579) has delivered a negative return over five years and China Fishery Group (SGX: B0Z)  has been as flat as a flounder.

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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 Director David Kuo doesn’t own shares in any companies mentioned.