Investing in commodities is something that isn’t easy for many investors. That’s because the trading of commodities tends to be more complex and is commonly associated with higher risk features such as high volatility and leverage.
Another way of investing in commodities would be through listed companies that are operating within the industry. For example, if you wish to invest in rubber – an important commodity needed in the production of household items such as tyres, gloves, balloons and condoms, you can invest through some of the listed companies on the Singapore Exchange (SGX).
In this edition of 4 Stocks This Week, we look at four rubber companies that are on the SGX and how they have performed over the past 12 months.
Top Glove (SGX: BVA)
A Malaysia-based company, Top Glove is the world’s largest rubber gloves manufacturer, with its products exported to more than 195 countries worldwide. It’s primarily listed on the Bursa Malaysia, the stock exchange of Malaysia and has a secondary listing on the SGX.
With the current COVID-19 outbreak, rubber gloves are naturally in high demand and this would increase the demand on the products which Top Glove are best known for – its rubber gloves.
Over the past 12 months, total returns for Top Glove is at 24.5%. Since the start of the year, returns for the stocks are at 18.6%, a clear sign that investors are bullish that the increase in demand for rubber glove is going to be positive for the company’s bottom line.
Riverstone Holdings (SGX: AP4)
Established in 1989, Riverstone Holdings specialises in the production of Cleanroom gloves, fingercots and packaging bags. The Malaysia based company is also expected to see an increase in demand for its products because of the COVID-19 outbreak.
Over the past 12 months, the company has seen a return of – 6.1% though its 3-year return is at 24.0%. It’s worth noting as well that Riverstone is up 10.3% since the start of 2020.
The company is currently trading at $1.00 at a price-to-earnings (P/E) ratio of 17.0. A Business Times article published last week noted that many analysts are bullish on their outlook for Riverstone Holdings for 2020, given the strong demand for products produced by the company.
UG Healthcare (SGX: 41A)
This is the first time we are covering UG Healthcare on the 4 Stocks This Week column.
UG Healthcare is listed on the Catalist board on the SGX. Also based in Malaysia, the company manufacture and distribute a wide range of latex-related products for healthcare practitioners including surgical and cleanroom gloves.
It’s worth noting in a Business Times article last month that UG Healthcare net profit was down 35.9% year-on-year for the six months to 31 Dec 2019 at S$846,000, even as revenue grew by 28.5% to S$53.2 million. This could be a sign that net profit margin for the company is thin. UG Healthcare noted that the decline in bottom line was due to higher admin costs to boost its distribution in Britain, Brazil, China and Nigeria.
Year to date return for the stock is at 57.1%, a sign that the COVID-19 outbreak has increase investors’ appetite not just for rubber gloves, but also the companies that produce these gloves. Do note that 3-year returns for the stock is at – 14.7%.
Halcyon Agri (SGX: 5VJ)
This is the first time we are covering Halcyon Agri on the 4 Stocks This Week column.
While not directly involved in the production of Rubber Gloves, Halcyon Agri is one of the world’s largest natural rubber supply chain manager. The company owns 120,000 hectares of plantation land in Cameroon, Ivory Coast & Malaysia, as well as numerous rubber plantation factories to help process raw rubber into finished rubber.
Halcyon stock prices has been on a gradual decline over the past few years. At the start of 2018, the company was trading at a price of $0.652 (8 Jan 2018). Today, it’s at $0.405. The company is currently trading at a price-to-book value of 0.811. It made a loss of US$3.73 million for FY2019.
To read up more about some of these stocks, you can read a market update report from SGX.
Read Also: How Do You Start Investing In Rubber?
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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.