With the exception of a few industries such as healthcare, daily essentials and technologies companies, most sectors have struggled in 2020, given the drastic slowdown in the economy because of the global COVID-19 pandemic. Singapore’s manufacturing industry is no exception.
With Singapore’s economy entering into its Phase 2 of its reopening, we are starting to see some light at the end of the tunnel. Some stocks with a manufacturing focus have been highly traded over the recent months.
As observed in a SGX Market Update report, many of these manufacturing stocks have outperformed the STI in 2020 (STI has fallen 15.3% in 2020 as of 16 June 2020). The bad news though, is that most of these companies in the articles are still down in 2020, though all of them have shown resilience in its share price. Do note that three out of four of these companies are also listed on the STI.
In this week’s edition of 4 Stocks This Week, we look at some manufacturing companies on the SGX and their performance thus far.
AEM Holdings Ltd (SGX: AWX)
The sole company in our article that has seen a gain in 2020, AEM is a semiconductor company that provides customised system solutions to advanced manufacturers across various industries around the world, as well as designing and manufacturing precision engineering products used in the electronics, life sciences, instrumentation and aerospace industries.
Since the start of 2020, the share price for AEM has increased by 51% from 2.02 to 3.07 as of 19 June. This is off the back of an impressive order book thus far in 2020, with revenue guidance for FY2020 from the company indicating it expects between $430 million to $445 million.
In comparison, revenue for the company for FY2019 was $323 million (which by itself was also a record for the company)
Yangzijiang Shipbuilding (SGX: BS6)
Yangzijiang is a large shipbuilding company which is based in the People’s Republic of China. Its main business is in commercial shipbuilding, producing a range of vessels such as bulk carriers, multi-purpose cargo vessels, containerships, chemical tankers, and offshore supply vessels.
With the COVID-19 global pandemic, it should come as no surprise if its order book softens for 2020 as companies may reduce their order of new ships given the current uncertainty. At the same time, it’s worth noting that the company is currently trading at a price-to-book value of 0.65, which means the company’s current book asset is worth more than its market capitalisation.
Yangzijiang is currently trading at $0.96, down about 17% since the start of the year.
Wilmar International (SGX: F34)
Wilmar is one of the world’s leading palm oil plantation owners with its plantation based in Indonesia (65%), East Malaysia (26%) and Africa (9%). Palm oil is a necessary ingredient in the production of consumer goods such as cooking oil, bread, chocolate, peanut butter, soap and detergent.
As many of the produces that require palm oil are considered essential products, demand should remain relatively stable, or may even increase once the economy picks up and worldwide demand from hotels and restaurants increase. That said, similar to most commodity companies, managing price volatility for the company is also critical.
The company is currently trading at a price-to-book value of 1.07 and a price-to-earnings ratio of 13.9. Share price is currently trading at 3.82, down 7% in 2020 thus far.
Venture Corp (SGX: V03)
Venture Corp is a global electronics services provider with nearly 30 companies and 12,000 people under its umbrella.
With the majority of its factories located in Malaysia, the company, similar to many others, has been impacted by the movement control order (MCO) in the country. That said, the company range of products also includes medical devices and equipment, which could see greater demand during this health pandemic. As a manufacturing company, it’s likely the company will bounce back once demand, and its ability to produce supply, recovers.
Venture Corp share price has remained resilient in 2020. After starting the year at 16.48, it’s currently trading at 16.28.
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.