2015 Review For The Singapore Stock Market: Palm Oil Stocks

We are nearing the end of 2015. For many investors in Singapore, it has been a year of pain and hardship.

The SPDR STI ETF (SGX: ES3), an exchange-traded fund which tracks the Straits Times Index (SGX: ^STI), has seen its net asset value per unit fall 14% from S$3.408 at the end of December 2014 to S$2.93 as at 28 December 2015.

How have stocks in different segments of the market fared this year? Let’s have a look at major palm oil companies listed in Singapore to find out the biggest winners and losers for 2015 in that space.

The lowdown on palm oil

The palm oil industry is vital to the economy of Southeast Asia. Indonesia and Malaysia are the world’s two largest producers of palm oil. With them being neighbours of Singapore, it’s no real surprise to find that the stock market here is home to a few of the biggest palm oil companies around.

Due partly to weak pricing and unconducive weather, the palm oil industry has been lacklustre in 2015. It also seems likely to be the reason why most palm oil producers have lost significant value for their shareholders this year.

For this review, I’d be looking at some of the bigger palm oil players such as Golden Agri-Resources Ltd (SGX: E5H), Wilmar International Limited (SGX: F34)First Resources Limited (SGX: EB5)Bumitama Agri Ltd (SGX: P8Z) and Indofood Agri Resources Ltd (SGX: 5JS).

Source: S&P Capital IQ

The chart above plots the total returns (share price changes plus gains from reinvested dividends) for the quintet from 1 January 2015 to 29 December 2015.

First Resources stands out from the crowd by being the only company that showed a positive gain – of 3.7% – for 2015. First Resources has one of the youngest tree-age profiles for its plantations among its peers and continues to expand its business in a prudent manner, with a net debt to equity ratio of less than 43% as at 30 September 2015.

Indofood Agri Resources had suffered the greatest loss with a 29.8% decline. In the first nine months of 2015, the company had clocked a loss – it is the first time this has happened since 2006. This might indicate that the company is possibly facing its biggest challenges yet since its listing in 2007.

Foolish Summary

Although the stock market performance of stocks over a single year is often too short to fully reflect their fundamentals, it is still interesting to note the wide difference in performance between companies that are operating in a similar space.

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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 writer Stanley Lim owns shares in First Resources and Wilmar International.