Established in 1984 and headquartered in Singapore, Venture Corporation Ltd (SGX: V03) is a global electronics services provider. The company has grown significantly since its humble beginnings, and today employs more than 12,000 people across Southeast Asia, North Asia, America, and Europe.
Last Friday, Venture replaced Global Logistic Properties Ltd (SGX: MC0) in the Straits Times Index (SGX: ^STI). Global Logistic Properties is being taken private after its shareholders approved a buyout offer from a consortium of investors that includes its chief executive officer, Ming Mei, and a group of large Chinese companies.
Here are five things to note about the latest change in the blue-chip universe:
1. Within four months of becoming part of the Straits Times Index reserve list, Venture has been promoted. The reserve list comprises five companies that can replace any of the existing Straits Times Index constituents should they drop out for whatever reason during the period up to the next quarterly review. The vacancy created from the removal of a constituent within the Straits Times Index will be filled by selecting the reserve list’s highest-ranking stock by market capitalisation at the close of the index calculation two days before the deletion.
2. After the latest change, the remaining four stocks on the reserve list are Suntec Real Estate Investment Trust (SGX: T82U), Mapletree Commercial Trust (SGX: N2IU), Keppel REIT (SGX: K17), and Sembcorp Marine Ltd (SGX: S51).
3. According to a report by local bourse operator Singapore Exchange Limited (SGX: S68), Global Logistic Properties previously had a 3.3% weight in the index whereas Venture would have taken up 1.6% of the index. The weighting data is based on publicly available numbers as of 29 September 2017.
4. With the exclusion of Global Logistic Properties, the Real Estate sector would have its index weight reduced by around 3% while the Information Technology (IT) sector will mark its debut in the index with the addition of Venture. The IT sector’s indicative weight would be 1.6% of the entire Straits Times Index.
5. The largest sector in the Straits Times Index is Financials, with an indicative weight of 38.7%. This is followed by Industrials (22.5%) and Real Estate (15.6%). Singapore Exchange belongs to the Financials sector, along with the three local banks. The Industrials sector, meanwhile, includes Jardine Matheson Holdings Limited (SGX: J36), Jardine Strategic Holdings Limited (SGX: J37), and Keppel Corporation Limited (SGX: BN4).
As of 8 January 2017, Venture Corporation was valued at 21 times trailing earnings while the SPDR STI ETF (SGX: ES3), an exchange-traded fund that mimics the fundamentals of the Straits Times Index, had a trailing price-to-earnings ratio of 11.5.
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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 Limited. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange Limited.