Consumer staples have lagged the broader Singapore stock market this year after finishing at the top of the podium in 2016. But a handful of consumer stocks have far outperformed the 9% gain averaged by the sector this year.
Best World International (CGN.SG) is the best performer among Singapore consumer stocks. Shares of the nutritional supplement maker have surged a towering 117% this year. Food Empire Holdings (F03.SG) is in second place with a 48% rally, while Hanwell Holdings (DM0.SG) is not far behind with a 46% gain.
SGX strategist Geoff Howie notes consumer staples are defensive stocks that tend to perform better when the broader market is weak, which explains why the sector outperformed last year but is lagging the FTSE Straits Times index this year. However, a caveat to this generalization is the massive dispersion in the businesses and reach of Singaporean consumer staples companies.
The three top performers have all international consumer-oriented businesses, notes Howie, and delivered impressive earnings growth in the first quarter.
- Best World reported diluted EPS of 3.53 cents for 1QFY17, up from 2.17 cents in 1QFY16 (+62.7% YoY);
- Hanwell reported EPS of 0.15 cents in 1QFY17, up from 0.11 cents in 1QFY16 (+36.4% YoY); and
- Food Empire reported EPS of 1.17 US cents in 1QFY17, up from 0.75 US cents in 1QFY16 (+56.0% YoY).
Best World International shares trade at 17 times forward earnings and pays a 1.6% dividend yield. It’s expected to grow earnings at an average 25% annual pace over the next three to five years. Food Empire Holdings trades at 14 times forward earnings, while Hanwell trades at 0.7 times book value.