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The Singapore Market This Week: Golden Agri-Resources Ltd Leads the Pack Lower

For the week, the Straits Times Index (SGX: ^STI) inched down by 0.6% to end at 3,268.7. Of the 30 index components, 20 were in the red; nine were in the green while one – Singapore Exchange Limited (SGX: S68) – was flat.

The biggest loser of them all was Golden Agri-Resources Ltd (SGX: E5H), one of the leading palm oil plantation companies in Indonesia. Its shares tumbled 7.6% or 2.5 cents to end Friday at S$0.305.

For its 2018 first-quarter earnings, which the company reported on 15 May, revenue slumped 11.3% year-on-year to US$1.8 billion while net profit plunged 68.4% to US$11.9 million.

The company’s chairman and chief executive, Franky Widjaja, commented on the latest results and also about the long-term prospects:

“First quarter 2018 was a challenging period for the palm oil industry. Industry experts are also concerned about a production surplus in the second half of the year, due to seasonality and low production in the first quarter. However, we believe CPO [crude palm oil] prices will be supported by growing food demand as well as from increasing biodiesel usage. Over the long term, we believe demand for palm oil will remain strong, and the industry is well positioned to ride out occasional periods of volatility.”

Other blue-chip stocks that underperformed for the week include Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6) and Singapore Telecommunications Limited (SGX: Z74), or Singtel for short.

Yangzijiang finished the week at S$0.905, down 5.2% or 5 cents. At that price, it is yielding just slightly below 5%, which is high as compared to the market average. However, are its dividends sustainable? You can head here to find out more. Meanwhile, Singtel’s shares fell 1.3% or 4 cents to end Friday at S$3.08, which is its 52-week low price.

At the other end of the spectrum, land transport giant, ComfortDelGro Corporation Ltd (SGX: C52), was the biggest gainer of the 30-stock index. Shares in the firm rose 5.4% or 12 cents to S$2.35.

ComfortDelGro had been disrupted in recent times by the proliferation of ride-hailing apps, such as Grab and Uber (Grab acquired Uber’s Southeast Asia business in late March).

However, there could be some light at the end of the tunnel for ComfortDelGro’s Singapore taxi business. The chief executive of ComfortDelGro, Yang Ban Seng, said in the firm’s 2018 first-quarter earnings released on 11 May 2018:

“For this quarter, we saw a slower decline in our local Taxi business. With the reduced subsidy and incentives for drivers and riders by ride-hailing apps operators, and the Authority’s review of regulations for private hire vehicles, we believe that the competition will be on a more level playing field going forward. This is a positive development.”

According to local news reports, ComfortDelGro’s taxi bookings made through its call centre and phone app jumped by almost 9% in May 2018 as compared to a year ago, marking the largest year-on-year increase since September 2014.

Another winner this week was CapitaLand Commercial Trust (SGX: C61U), rising 1.2% or 2 cents to S$1.66.

On Friday, the real estate investment trust (REIT) announced that it is selling Twenty Anson, a 20-storey office building at Tanjong Pagar, to an unrelated third party for S$516 million. The sale price is 19.2% above the latest valuation and 20% higher than the REIT’s purchase price in 2012.

Twenty Anson’s divestment is aimed at reconstituting the REIT’s portfolio and optimising returns for unitholders. As of 31 March 2018, the property accounted for around 3% of the REIT’s net property income. On a pro-forma basis, the impact of the sale on CapitaLand Commercial Trust’s distribution is “expected to be neutral as loss of net property income would be offset by interest savings from loan repayment”.

The divestment is projected for completion in the third quarter of this year.

Elsewhere, shares in BreadTalk Group Limited (SGX: CTN) surged 15.5% or 16 cents to S$1.19. On Wednesday, the F&B firm made public that its wholly-owned subsidiary, Shanghai BreadTalk Gourmet Co Ltd, had entered into a joint venture agreement with Ge Ying to operate the BreadTalk brand of bakeries in Chongqing, China. Shanghai BreadTalk will own 30% of the joint venture company while Ge Ying will hold the remaining 70%.

The SPDR STI ETF (SGX: ES3), an exchange-traded fund which can be taken as a proxy for the Straits Times Index, was valued at a price-to-earnings ratio of 10.5 and had a distribution yield of 3% on Friday.

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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 and units of CapitaLand Commercial Trust. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange Limited and units in CapitaLand Commercial Trust.