Singapore’s Straits Times Index (SGX: ^STI), home to the 30 largest companies in Singapore, has fallen by over 7% since the start of the year.
Over the past three years, the index has gained a total of 10.1%, but not all stocks have managed to produce a positive return during the period. In fact, a recent SGX report revealed that the six weakest performing blue-chips have posted negative returns of almost 23% on average. Let’s take a quick look at the six stocks that are holding up the rear (data as of 30 August 2018, unless otherwise stated). For the first three companies, go here.
4. Sembcorp Industries Limited (SGX:U96) is the fourth weakest performer on the index registering a return of negative 14.4% over the last three years. Sembcorp is a leading energy, water, marine and urban development group operating across five continents. The company also owns a 61% stake in Sembcorp Marine Ltd (SGX: S51). The last couple of years have been tough for the group due to a few reasons. Firstly, there was the decline in oil prices which severely affected Sembcorp Marine’s businesses. Over on energy side of the business, Sembcorp has been seeing lower profits from its Singapore operations due to a tough operating environment. The company’s overseas operations in India and China also faces fluctuating energy prices. The latest quarter brought some good news for investors in Sembcorp Industries, but it remains to be seen if the trend can continue. At the moment, Sembcorp Industry trades at a market capitalisation of S$5.2 billion and offers a 1.4% yield.
5. ComfortDelGro Corporation Limited (SGX:C52) is one of the largest land transport company in the world with a presence in seven countries. ComfortGelGro is currently trading at market capitalisation of S$5 billion and sports a dividend yield of 4.5%. The past three years have seen ComfortDelGro return a negative 7.7%. Much of the pain that the company is feeling is coming from the advent of ride-hailing companies. The likes of Grab gave ComfortDelGro’s taxi businesses a run for its money which left investors pessimistic. On the positive side, ComfortDelGro has a solid position in two markets. These are the Mass Rapid Transport (MRT) operations and vehicle testing. The wide range of businesses within the transport sector may have provided some buffer, even as part of its business struggled.
6. Golden Agri-Resources (SGX: E5H) or GAR is one of the largest palm oil plantation companies in the world with plantations in Indonesia. The company manages more than 500,000 hectares of palm oil plantations. GAR is also a leading seed-to-shelf agribusiness which covers the downstream businesses of processing and food production. The last three years has been rocky for the business due to fluctuating palm oil prices, with prices trending downwards in general. Downstream margins have also been hit resulting in poorer profits from that side of the business. The company also cited competition from other seed oil companies while fluctuating currency exchange rates have created a challenging business environment. Over the same period, GAR shares has posted negative 6.6% in returns. Currently, the company has a market capitalization of S$3.1 billion and offers a dividend yield of 3.3%.
All six companies covered are facing challenges within their own industries. As an investor, we have to discern whether the challenges that a company faces are temporary, or represent a unfavourable trend that is expected to stay. If the company is unable to adapt, we might face share price losses in the years to come.
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The Motley Fool Singapore contributor Esjay contributed to this article. Esjay does not owns any of the shares mentioned.
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. Motley Fool Singapore writer Chin Hui Leong owns shares of Singapore Exchange.