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Meet Singapore’s 2 Largest Consumer Retail Stocks

A recent report by local bourse operator Singapore Exchange Limited (SGX: S68) had looked at some of Singapore’s largest retail-related companies there are within the GICS (Global Industry Classification Standard) Consumer Staples and Discretionary Sector.

Here are the two largest by market capitalisation: Jardine Cycle & Carriage Ltd (SGX: C07) and Dairy Farm International Holdings Ltd (SGX: D01).

Jardine Cycle & Carriage and Dairy Farm table
Source: Singapore Exchange report (data as of 25 January 2017)

Jardine Cycle & Carriage and Dairy Farm can actually be considered sister companies – both are under the corporate umbrella of the Jardine group of companies. Some of the other Jardine-related entities listed in Singapore’s stock market include Mandarin Oriental Limited (SGX: M04) and Jardine Matheson Holdings Limited (SGX: J36).

Jardine Cycle & Carriage may be listed in Singapore, but the majority of its revenue and profit come from the Indonesia-listed Astra International.

Astra, which is 50% owned by Jardine Cycle & Carriage, does business predominantly in Indonesia and can be considered a conglomerate given its wide business interests that range from automotive to heavy machinery, financial services to agribusiness, and information technology to mining.

The first nine months of 2016 saw Jardine Cycle & Carriage’s revenue decline by 3% year-on-year to US$11.63 billion. Meanwhile, the company’s profit attributable to shareholders dipped by 5% to US$514 million.

Jardine Cycle & Carriage’s management commented in the 2016 third quarter earnings that “Astra’s automotive businesses are expected to continue to produce improved performances, with some progress in its agribusinesses and a modest recovery in its heavy equipment and mining operations.” But, management added that “concerns remain over the level of loan-loss provisions at Permata Bank.”

Dairy Farm may be a bricks-and-mortar retail company, but it has a rather complex business given the many store formats it has across Asia. The company has hypermarkets, supermarkets, pharmacies, convenience stores, restaurants, and home furnishing stores.

All told, Dairy Farm has around 6,500 retail stores in Asia.  In Singapore, the company is the owner of retail stores such as GuardianCold StorageGiant, and 7-Eleven.

In the third quarter of 2016, Dairy Farm’s management commented that all its divisions “did well to achieve sales growth compared with the third quarter of last year.”

Moreover, “underlying earnings were also ahead of the prior year as higher contributions from Food, Restaurants and Yonghui offset slightly lower profits from the Health and Beauty and Home Furnishing Divisions.”

The company added that “similar trading conditions are expected to continue for the remainder of the year.”

If you notice from the table above, you’d find that both Jardine Cycle & Carriage and Dairy Farm’s shares have delivered strong total returns over the last 12 months. This is an example of how large companies can also be solid winners.

Some investors think that good returns can only be found among obscure and small companies – as Jardine Cycle & Carriage and Dairy Farm has shown, this is not true.

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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 Singapore Exchange and Dairy Farm International Holdings. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.