4 Things For Investors to Learn About Singapore’s Electronic Stocks

Singapore is well-known for many things, but one thing that it probably isn’t well known for is its electronics and manufacturing sector.

A recent report from bourse operator Singapore Exchange Limited (SGX: S68) revealed that there are 41 stocks in Singapore’s stock market that are under the Electronic Equipment, Instruments & Components industrial classification. Here are four interesting observations on those stocks that I had picked out from the report (data as of 29 March 2016, unless otherwise stated):

  1. The majority of the electronics stocks do not have large market capitalisations. For instance, the tenth largest electronic stock, IPS Securex Holdings Ltd (SGX: 42N), had a market capitalisation of just $100 million. None of the stocks are represented in Singapore’s stock market barometer the Straits Times Index (SGX: ^STI) either.
  2. The electronic stocks in Singapore do not appear to have egregious price-to-earnings (PE) and price-to-book (PB) ratios. The average PE ratio for the 10 largest electronic stocks was 13.6. Meanwhile, the PB ratio stood at 1.7. For perspective, the SPDR STI ETF (SGX: ES3), an exchange-traded fund that mimics the fundamentals of the Straits Times index, had a PE and PB ratio of 11.6 and 1.2, respectively, as of 4 April 2016.
  3. The top electronic stock by market size is Venture Corporation Ltd (SGX: V03). The electronic manufacturing services (EMS) provider recorded revenue growth of 7.7% in 2015 along with a doubling of profit. The company also ended 2015 with a healthy balance sheet that had nearly $325 million in net cash.
  4. Dividend investors may want to pay some attention to the electronic stocks. Venture Corporation sported a dividend yield of 6%. The EMS provider generated $219 million in free cash flow in 2015 which provides the raw fuel for its dividends. The company though, kept its dividend payout in 2015 unchanged from that of 2014.

The report from the Singapore Exchange gives us some insights into the world of Singapore’s electronic stocks. This may give us a head-start on our investing homework that follows.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.