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4 Stocks This Week (STI Leaders) [25 January 2019] – Thai Beverage; Genting Singapore; City Developments; Venture

Are we looking at a mean reversion for these stocks that have done well in 2019 so far?

 

2019 has only just arrived and the stock market is already looking upbeat compared to 2018. Having opened the year at 3,051 points, the Straits Times Index (STI) closed at 3,202 points on 25 January 2019, an increase of about 5% since the start of the year.

Since an index is made up of different stocks, it makes sense that there are some stocks in the STI which have performed exceptionally well since the start of the year, contributing to the overall performance of the index. As pointed out by SGX Market Strategist Geoff Howie, six of the seven poorest performing STI stocks in 2018 were among the STI’s 10 strongest stocks in 2019 thus far.

This suggests that mean reversion could be at play for some of these popular blue-chip counters. Mean reversion is a financial theory suggesting that stock prices eventually return back to their long-term average price (i.e. what goes down should come up over time).

In this week’s edition of 4 Stocks This Week, we look at some of the STI counters that have been performing well in 2019 so far, after having endured a disappointing 2018.

Read Also: Straits Times Index (STI) Stocks: How Much Would You Have Gained (Or Lost) If You Invested In 2018

Thai Beverage PLC (SGX: Y92)

After closing 2018 at $0.61 (down 31% in 2018), Thai Beverage has started 2019 with a bang, closing at $0.74 as of 25 January. This translate into a year-to-date (YTD) price change of about 20.5%, not bad for a month’s work, if you managed to capitalise on this.

As its name suggests, Thai Beverage is involved in the production and distribution of both alcoholic and non-alcoholic drinks in Thailand and internationally. The company is based in Thailand, and is 45% owned by Siriwana Company Ltd, whose founder Charoen Sirivadhanabhakdi is one of Thailand’s richest man with an estimated net worth of $14.7 billion.

The company is currently trading at a Price-to-earning (P/E) ratio of 22.775 and a price-to-book (P/B) value of 3.529.

Genting Singapore Ltd (SGX: G13)

After a dismal year in 2018 (total return of -23%), Genting Singapore has seen its share price increase to $1.06, up about 9% since the start of the year.

The company primarily owns Resorts World Sentosa, a destination resort most of us would know, which includes a casino, Adventure Cove Waterpark, S.E.A. Aquarium, Universal Studios Singapore Theme Park, MICE facilities, hotels, Michelin starred restaurants, and specialty retail outlets. Genting Singapore is majority owned by Genting Berhad.

It’s currently trading at a P/E ratio of 17.3 and a P/B value of 1.67.

City Developments Limited (SGX: C09)

Most Singapore property counters had a poor 2018 not only because of the slow market, but because of unexpected cooling measures being introduced by the Singapore government, after the property market started showing signs of a recovery. The sudden introduction of the cooling measures in July 2018 put a dampen on property counters, with City Development showing a total return of – 34% in 2018.

2019 has been good for the property giant thus far, as it has seen a return of about 11% since the start of the year. After closing the year at $8.12, its stock price has climb to $9.06 as of 25 January 2019. This does not cancel out investors’ loss sustained in 2018 but it’s an encouraging start for the company.

The company is currently trading under its book value at a P/B value of 0.81, which would make any Benjamin Graham followers sit up to take notice. This means that that if you are buying a condominium unit from City Development for investment reasons, you may also want to consider buying the company’s stock as well.

Read Also: Biggest Condominium Launches To Look Out For In Singapore In The First Half Of 2019

Venture Corporation Ltd (SGX: V03)

Venture Corp is up about 13% since the start of 2019 after incurring a loss of about 29% in 2018. In fact, the past week has seen the electronic manufacturing company make strong gains in its price. It’s worth noting however that its current price of $15.81, is still a far cry from its 52-week high of $29.51 achieved back in April 2018.

With a market capitalisation of about $4.5 billion today, Venture Corp is one of the smallest company on the STI. The company is currently trading at a P/E ratio of 12.7. As an electronic manufacturing company, Venture Corp is susceptible to macro political risk arising from trade-war tension between the U.S. and China.

Whether it recovers to its 2018 high will depend largely on its profitability and revenue, which are tied to external factors.

Read Also: CEO Salaries: Here’s How Much The Biggest Listed Companies in Singapore Paid Their CEOs In FY2017

You can read more about how some of the STI’s least performers in 2018 are amongst STI leaders in 2019 in an SGX market update here.

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.

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