Who Might Benefit From Singapore’s Strong Manufacturing Output In September?

Credit: Simon Cunningham

Yesterday, the Economic Development Board (EDB) released its manufacturing output data for Singapore. Turns out, there was a solid 6.7% increase in local manufacturing output in September this year compared to the year before.

Let’s take a look at which manufacturing areas were strong and which were weak.

 The strong and stronger

Biomedical and pharmaceutical manufacturing output had very strong year-on-year growth in September. The two areas saw year-on-year jumps in output of 22.2% and 26.9%, respectively. This was boosted by higher demand for their products. The medical technology sector also saw a 9.6% improvement from the previous year.

Interestingly, the electronics sector had enjoyed a 15.9% increase in output in September too, mainly because of a 34.8% boost in the semiconductor space.

All these strong results from the above sector could be good news for companies such as Venture Corporation Limited (SGX: V03) and Hi-P International Limited (SGX: H17), depending on the product mix that they are manufacturing for their clients.

Other areas that saw growth are land transport and aerospace – output there had improved by 9.1% and 0.9%, respectively, over September 2015. So, this could mean that companies such as SIA Engineering Company Ltd (SGX: S59) and Singapore Technologies Engineering Ltd (SGX: S63) are still be growing even in this environment.

The Weak and Weaker

The transport engineering sector saw a big contraction in September – its output declined 18.9% year-on-year. This was mainly due to a 31.5% decline from the marine and offshore engineering segment. Clearly, this sector, which includes companies such as SembCorp Marine Ltd (SGX: S51) and Keppel Corporation Limited (SGX: BN4), is suffering from one of its worst downturns over the past decade.

Foolish Summary

The data coming out from EDB is showing us how the general manufacturing sector is doing in Singapore. But, how each company is performing can differ drastically from the macro-economic data. It is important for investors to know the difference between macro-economic data and company-specific results before making investment decisions.

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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 Keppel Corporation.