• The FTSE ST All-Share Index has seen a comparatively muted performance in 2Q21 to 22 June, with a flat 0% total return. However, the dispersion in constituent total returns spanning +34% for iFAST Corp to -22% for Thomson Medical Group, brought their respective 2021 returns to 22 June to 175% and 74%.
   
• iFAST Corp, Hong Leong Asia, Delfi, First REIT, Sunpower Group, Sembcorp Industries, Singapore Press Holdings, ARA Logos Logistics Trust, EC World REIT, Frencken Group led the Index in 2Q21 to 22 June, averaging 21% total returns, while combined recipients to more than S$220 million net Institutional and net Proprietary inflow.
   
• The performance of the five stocks has coincided with resilience in the financial services technology, trade and manufacturing sectors, in addition to recent local emphasis in significant business restructuring and global environmental protection.

The FTSE ST All-Share Index has seen a comparatively muted performance in 2Q21 to 22 June, with a price decline of 1.1%, yet a heavy quarter for dividends boosting the quarterly total return to exactly 0.0%. This has brought the 2021 year to 22 June total return of the Index to 11.1%, which compares to a 6.2% total return for the regional FTSE ASEAN All-Share Index benchmark. The FTSE ST All-Share Index is comprises of 107 constituents, with Sri Trang Gloves (Thailand) PCL joining the Index effective 21 June.

As an Index, the FTSE ST All-Share Index is currently priced at a 9% premium to its book value, after ending 2020 at a marginal 2% discount to book value. While the Index valuation is in the proximity of the 7% premium to book value observed pre-COVID, the broader FTSE ASEAN All-Share Index has extended its pre-COVID premium to book value by 20%. For reference, the FTSE ST All-Share Index was trading at a 20% premium to book value at the end of 4Q17 and a discount of close to 20% at the end of 1Q20.

While the Index has generated a flat total return so far this quarter, there has been much dispersion in the returns of the individual constituents, spanning a 34% total return for iFAST Corporation to a decline of 22% for Thomson Medical Group, bringing their respective 2021 returns to 22 June to 175% and 74%.

With global equity markets increasingly looking to economic normalisation in 2Q21, a number of stocks saw moderation in their recent flows and performances. For instance, the next four next least performing stocks of the Index in the 2Q21 to 22 June were Wilmar International, AEM Holdings, Singapore Airlines and Japfa Holdings, with AEM Holdings and Japfa Holdings were among the four strongest stocks of the Index in 2020 and Singapore Airlines the eight strongest stock of the Index in 1Q21. Meanwhile Wilmar International was among the top 20 performing stocks of the Index in both 2020 and 1Q21.

The 10 strongest stocks of the FTSE ST All-Share Index in 2Q21 to 22 June are tabled below. All 10 stocks were recipient of combined net institutional and net proprietary inflows over the period, amounting to S$223 million. 

Source: SGX, Refinitiv, Bloomberg (Data as of 22 June 2021)

Of the 10 stocks, iFAST Corporation (“iFAST”), Singapore Press Holdings were also among the 10 strongest performing stocks of the FTSE ST All-Share Index in 1Q21, while ARA Logos Logistics Trust ranked just outside the 10. For 4Q20, Hong Leong Asia (“HLA”), Sunpower Group and Sembcorp Industries ranked among the 10 strongest performing stocks of the FTSE ST All-Share Index, while First REIT ranked among the least performing constituents.

For key themes and drivers, the five strongest constituents of the FTSE ST All-Share Index in 2Q21 to 22 June demonstrate the recent resilience seen in regional financial services, technology, trade and manufacturing, in addition to the emphasis on changing food preferences, significant business restructuring and environmental protection.

The five strongest stocks of the FTSE ST All-Share Index in terms of total return in the 2Q21 to 22 June were as follows:
 

1. iFAST Corporation (+34% to S$8.22)

Much of the 2Q21 to date gains of iFAST were attributed to the share price rallying 40% from S$6.12 to S$8.58 between 11 May and 31 May. IFAST highlighted back on 22 April that net inflows of client assets registered a record $1.28 billion in 1Q21, pushing the Group’s assets under administration to a record $16.11 billion as at 31 March 2021 (growth of 68.9% YoY). The Group maintains that the robust growth seen by the Group in recent times has resulted from its past investments in building up a strong integrated digital wealth management platform. By coincidence, between 11 May and 31 May, the price of investable digital asset Bitcoin declined 36%. IFAST’s recently published research on Bitcoin and cryptocurrencies can be read here. According to Bloomberg, two of the local Analysts that cover iFAST also upgraded their 12M target prices for the stock, by an average of 26% between 26 May and 28 May.

2. Hong Leong Asia (+26% to S$0.955)

Much of the 2Q21 to date gains of HLA were attributed to the share price rallying 36% from 76.5 cents to S$1.04 in April. Diesel Engines accounted for 91% of HLA’s total external revenue in FY20 and its subsidiary China Yuchai International has a controlling interest in its principal operating subsidiary Guangxi Yuchai Machinery Company, which is one of the largest engine manufacturers for commercial vehicles in China. Through R&D, the China Yuchai arm has the ability to produce engines compliant with China National VI and Tier-4 emission standards. In March, China Yuchai’s President was anticipating greater buying activity in National VI (a) compliant diesel engines, prior to its full implementation on 1 July, and hence skewed demand in 1H21. HLA noted in a recent AGM question that the China National VI standard is equivalent to the Euro VI standard, reiterating China Yuchai’s new engine products meet this new industry emission standard. Hong Leong Asia added that China Yuchai is also developing alternative new energy solutions in new generation hybrid power and working closely with its customers to create innovative and sustainable urban solutions for the future that are in the early stage of development and will take time to develop their full potential. According to Bloomberg, three Analysts initiated coverage on HLA in 2Q21, and the stock has ranked amongst the top 100 stocks by turnover in 2021, up from top 200 stocks by turnover in 2020. 


3. Delfi (+23% to S$0.965)

After forming a session low of 80.0 cents on 14 May, the share price of Delfi has rallied to 96.5 cents on 22 June. On 27 May, the company published its FY20 (ended 31 Dec) AGM minutes, which included answers to 21 questions submitted by shareholders. Delfi noted that the global chocolate confectionery business trend remains positive despite the COVID-19 pandemic, and the company expects the same trend to be replicated in its own key markets and therefore the prospects should remain good in the medium to long term. Over the longer term, the key mega trends indicate that more consumers will adopt an inclination towards healthier eating and in the chocolate confectionery industry, Delfi expects this to include products that are plant-based; have a higher cocoa content; and have less sugar and milk. The Van Houten brand has also been successfully integrated into its portfolio of brands following the acquisition of the perpetual and exclusive license to the Van Houten brand for markets in Asia (excluding India, Korea and the Middle East) in 2018. In FY20, Van Houten achieved overall growth of 18% across all Delfi’s markets and contributed US$6.6 million in sales to its regional markets. One key change the company observed is that consumers are shopping at locations closer to home, while the COVID-19 pandemic has also accelerated online shopping behaviour. This means Delfi is focusing more on digital marketing and use of social media, moving away from traditional advertising.


4. First REIT (+20% to S$0.27)

The unit price of First REIT has gradually gained 17% from 23.0 cents at the end of 1Q21 to 27.0 cents on 22 June, with a 0.65 cent distribution that went ex-div on 17 May. On 18 May, FIRST REIT announced it has completed strategic initiatives to restructure, recapitalise and reposition for sustainable future growth.  The Manager of the REIT restructured the master lease agreements (“MLAs”) of 14 healthcare assets in Indonesia with effect from 1 January 2021, has recapitalised its balance sheet, and refinanced its debt obligations to reposition itself for growth (click here for more).   The restructured LPKR MLAs and the restructured MPU MLAs have extended the lease term for the LPKR hospitals and the MPU hospitals to Dec 31, 2035, with an option for a further 15-year renewal term with the mutual agreement of both the relevant master lessors and the relevant master lessees, extending First REIT’s weighted average lease expiry for its entire portfolio from 6.4 years to 12.3 years as of the end of 2020. FIRST REIT has been the strongest performer of the S-REIT Sector in the 2Q21 to 22 June.

As discussed here, the Healthcare Sector led the global stock market in the 2Q21 to 18 June, which also saw Tianjin Zhong Xin Pharm Group, Parkway Life REIT and Riverstone Holdings among the top 20 performers of the Index in the 2Q21 to 22 June.

5. Sunpower Group (+20% to S$0.82)
 

While the China-based environmental protection solutions specialist has seen its share price rise just 3% from 79.5 cents at the end of 1Q21 to 82.0 cents as of 22 June, the stock went ex-dividend with a 14.06 cent special cash distribution on 9 June, and ex-dividend again on 22 June for the Final FY20 (ended 31 Dec) 0.3 cent distribution. The 14.06 cent special cash distribution on 9 June was the Tranche 1 consideration from the disposal of the entire manufacturing and services business of the company. The company did caution that there is no certainty or assurance that the Tranche 2 Consideration will be received or that the Tranche 2 Special Dividend will be paid (click here for more). On 27 May, the Group announced it had completed the construction of the steam distribution pipeline that connects Changrun Project to Sanli’s facilities and commenced the steam supply to Sanli ahead of schedule due to its strong execution and project management capability.  For its 1QFY21 (ended 31 Mar) Sunpower reported that group revenue rose 31.2% YoY to RMB 882.8 million after the environmental protection solutions specialist reported a record high in group revenue in its FY20 (ended 31 Dec). According to Bloomberg, two of three Analysts increased their 12M target price on the stock by an average of 8% in May. The average daily turnover of Sunpower, an environmental protection specialist, has also grown fivefold in the 2021 year to date from the full 2020 year. This has placed the stock among the top 60 stocks by turnover, up from top 120 stocks by turnover in 2020.

The five next best performing constituents in the FTSE ST All-Share Index for the 2Q21 to 22 June included Sembcorp Industries, Singapore Press Holdings, ARA Logos Logistics Trust, EC World REIT and Frencken Group. The performance of the five stocks further demonstrate elements of resilience seen in the technology, trade and manufacturing sectors, in addition to the recent emphasis in significant business restructuring and environmental protection. However, as noted above, prospects of economic normalisation has coincided with moderation in recent flows and performances, which has seen some of the previous outperformers relevant to those sectors and themes lag the benchmark in the 2Q21 to 22 June.