What Can Investors Learn From The Latest Results Of The Top 30 Companies In Singapore?

Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI), is made up of 30 companies listed here.

The neat thing about this group of 30 companies is that they are some of the biggest corporations in our stock market and their business performance can give us some idea about the current business environment of Singapore and other parts of Asia.

The latest earnings season had ended recently and yesterday, I placed the index’s 30 constituents into three different buckets. (Technically, I only worked with 28 companies as I had left out Hongkong Land Holdings Limited (SGX: H78) and Jardine Matheson Holdings Limited (SGX: J36) – both of them only report their results on a half-yearly basis, and so, did not participate in the latest earnings season.)

One group consists of companies that have delivered top-line and bottom-line growth in their latest quarterly earnings, one contains companies with mixed results, and the last comprises companies with falling revenue and profit.

Here are some themes I spotted after the exercise:

1. There are many losers within the index

Among the 28 companies, 11 of them, including Sembcorp Industries Limited (SGX: U96) and Singapore Airlines Ltd (SGX: C6L), reported lower revenue and net profit. That’s already 39% of the index.

If we count all the index’s constituents that reported a lower net profit in their latest earnings results, then the number will increase from 11 to 13, with Singapore Technologies Engineering Ltd (SGX: S63) and UOL Group Limited (SGX: U14) joining the group. This works out to nearly half of the index having suffered from a profit decline in their latest quarter.

2. The industries that are facing challenges

Both Sembcorp Industries and Keppel Corporation Limited (SGX: BN4) did not fare well (they both belonged to the group of companies that reported lower revenue and profit). This is a reflection of the difficulties experienced by companies that are related to the oil & gas industry.

Shipping is another troubled area as we have Yangzijiang Shipbuilding Holdings Ltd’s (SGX: BS6) profit falling by nearly 60%.

Another industry that appears to be facing headwinds is telecommunications. Both Singapore Telecommunications Limited (SGX: Z74) and StarHub Ltd (SGX: CC3) – along with their smaller peer M1 Ltd (SGX: B2F), which is not part of the Straits Times Index – saw their revenues and profits fall.

3. The industries that remained resilient

Palm oil producers within the index, namely, Golden Agri-Resources Ltd (SGX: E5H) and Wilmar International Limited (SGX: F34), have held up pretty well in terms of their business results and that’s an indication of the recent strength of the palm oil industry.

Real estate appears to be another healthy area given the growth experienced by the likes of CapitaLand Limited (SGX: C31), City Developments Limited (SGX: C09), and Global Logistic Properties Ltd (SGX: MCO).

Banking is yet another industry that has proved to be resilient. Both DBS Group Holdings Ltd (SGX: D05) and Oversea-Chinese Banking Corp Limited (SGX: O39) delivered growth in revenue and profit in the latest quarter whilst United Overseas Bank Ltd (SGX: U11) only saw a marginal decline in revenue.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of United Overseas Bank. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.