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These 2 Blue Chips Lost To The Straits Times Index In 2017

The Straits Times Index (SGX: ^STI) started 2017 at 2,881 points and ended the year 18.1% higher at 3,403.

Yet, this healthy return does not imply that all 30 companies within the Straits Times Index had similar returns. In fact, there were some big losers, some flat stocks, and some huge winners within the group of the 30 blue chip stocks.

This article is the second in a series that will look at the outperformers and laggards among the Straits Times Index’s constituents. The first article discussed three blue chips that outperformed the index in 2017. In here, I will focus on two companies that lost to the index. [Editor’s note: The third and fourth article in this series have been published. They are on another three blue chips that beat the index, and on another three blue chips that lost to the index. They can be found here and here.]

The first company I’m looking at is agribusiness giant Wilmar International Limited (SGX: F34). The company’s business activities include oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, the manufacture of specialty fats, oleochemicals, biodiesel, fertiliser, as well as flour and rice milling.

Readers with good memory will remember that Wilmar was one of the best performing blue chip stocks in 2016 with a gain of 22.1%. 2017 proved to be a different story as Wilmar’s shares fell by 13.9% in price. This happened despite the company’s strong financial performance in the first nine months of 2017. During that period, Wilmar experienced a 9.7% year-on-year increase in revenue to US$32.3 billion. Its net profit jumped 92.4% to US$791.8 million and its core net profit (which strips out exceptional items) was up 74.0% to US$673.6 million.

At its current price of S$3.21, Wilmar has a trailing price-to-earnings (PE) ratio of 11.0.

Another loser within the Straits Times Index in 2017 was Golden Agri-Resources Ltd (SGX: E5H). The company, which is also involved with agriculture like Wilmar, is an integrated palm oil company with large oil palm plantations in Indonesia (a total planted area of 486,684 hectares as of 30 September 2017). The firm has a presence in the entire value chain of the palm oil industry.

Golden Agri’s experience in 2017 also shares similarities with Wilmar:

1. In terms of the business, Golden Agri has done well so far in 2017. In the first nine months of the year, the company’s revenue was up 10% year-on-year to US$5.58 billion. Underlying net profit soared 80% to US$217 million.

2. Golden Agri was also one of the biggest winners in the Straits Times Index with a price gain of 26.5%.

3. In 2017, Golden Agri’s stock price fell by 14.0% despite its good business performance.

Golden Agri has a PE ratio of 24.2 at its current stock price of S$0.385.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.