China’s stock market has been having a rough time since the start of this year.
The Shanghai Composite Index is down some 16% year-to-date. However, there are a group of China-focused companies that have done well over the last three years. A recent report from SGX on the FTSE ST China Index provided more insight.
The FTSE ST China Index is made up of constituents found in the FTSE ST All-Share Index with exposure to Middle Kingdom. As a criteria, companies in the index must derive at least 50% of their sales revenue, or have 50% of their operating assets located in mainland China. With that in mind, let’s look at three Singapore-listed companies which are part of the index, and have benefited from the rise of China (total return data based on three year returns prior to 21 August 2018):
1. Valuetronics Holdings Limited (SGX: BN2) is an integrated electronics manufacturing services (EMS) provider that offers a broad combination of design, engineering, manufacturing, and supply chain support services. Valuetronics has a market capitalization of around S$336 million today. Over the past three years, Valuetronics has posting total returns of 167%. Currently, the stock’s price-to-earnings (PE) ratio stands 9.4, and offers a dividend yield of 6.0%
2. Yanlord Land Group Limited (SGX: Z25) is in the business of property development and investment. Yanlord Land has delivered total returns of 58% over the last three years. Today, the firm has a market capitalisation of S$2.9 billion. The stock offers a 4.4% dividend, and is trading at a price-to-tangible book ratio of 0.6.
3. The last company to round up the list is China Aviation Oil (Singapore) Corporation Ltd (SGX: G92). China Aviation is the largest purchaser of jet fuel in the Asia Pacific region, and is also a key supplier of imported jet fuel to the civil aviation industry in China. The company benefits from the booming travel industry in China. Over the last three years, China Aviation stock has flown to a total return of almost 197%. Apart from the capital returns, China Aviation also pays out a decent dividend of 2.9%, and trades at a PE of 10.7.
To sum up, while the Shanghai Composite Index has seen a swoon over the past year, but if we widen the lens, there were China-related companies have still performed well over the past three years. We have looked at three Singapore companies as a first step, but it should serve as a starting point for further research to figure out where these three companies can continue to perform over the long-term.
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The Motley Fool Singapore contributor Esjay contributed to this article.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chin Hui Leong does not own any of the shares mentioned. Motley Fool Singapore contributor Esjay does not own any of the shares mentioned.