• The FTSE ST Small Cap Index comprises multiple companies that represent the Industrials Sector, with the segment of stocks operating across APAC and averaging an 11% ROE. Overarching drivers for the segment include regional growth, trade, geopolitical fragmentation and input costs. 
   
• Samudera Shipping has led the segment of stocks with a 14% gain in the 2024 YTD, while also being the strongest performer of the segment over the past 5 years. The Group owns and operates ocean-going ships, providing containerised feeder shipping services across ports in South East Asia, the Indian Subcontinent and Middle East.
   
• These stocks also include the largest jet fuel buyer in APAC, China Aviation Oil (Singapore) Corporation, which recently reported its FY23 (ended 31 Dec) total gross profit leapt 43% from FY22 to US$51 million, on the back of higher gains from jet fuel supply and trading of other oil products.

 The FTSE ST Small Cap Index currently includes seven companies that represent the Industrials Sector, with average daily trading turnover for each of the stocks ranging from S$60,000 a day, to S$3.0 million a day. Among this segment of stocks, COSCO SHIPPING International (Singapore) Co has seen a significant increase in its average daily turnover (ADT) this year, with the ADT up fivefold from its 2023 ADT. 

Note: ADT refers to average daily turnover; NIF refers to net institutional flows; TR refers to total returns.

Source: SGX, Refinitiv (Data as of 6 March 2024).

Outside of the Index, there are more Industrial Stocks that have also seen similar ADT in the 2024 year thus far. These include Marco Polo Marine, Beng Kuang Marine, Ley Choon Group, SBS Transit, VICOM and Boustead Singapore. Regional crane operator Tiong Woon Corporation Holdings has been the next most traded stock of the Sector with an average of S$50,000 a day.

Overarching drivers for the segment include regional growth, trade, geopolitical fragmentation and the recent increased input costs. At the same time, company outlooks have noted there has been some variation in growth across the sub-industries and across the different geographical revenue exposures.

For instance:

• Samudera Shipping Line noted with its FY23 (ended 31 Dec) results that “operating conditions in the container shipping industry are expected to remain challenging, amid disruptions to vessel availability and port congestions wrought by the Red Sea conflict. The Group thus expects freight rates and vessel charter rates to be volatile in the near term. Meanwhile the Group added that ’stronger demand for bunker fuel as vessels reroute to bypass the conflict is expected to put upward pressure on bunker costs”. Following its bumper FY22 revenue of US$991 million, the Group’s FY23 revenue came in at US$583 million, up from US$527 million in FY21 and US$348 million in FY20.
   
• China Aviation Oil (Singapore) Corporation [CAO] noted its stellar FY23 performance reflected “the strong rebound in international air travel and the robust recovery of air passenger traffic in China while at the same time underscoring the Group's strong fundamentals and resilient business model despite the headwinds in the global economy and geopolitical uncertainty”.  De-globalisation has been on top of the CAO CEO’s mind, with Mr Wang noting in 2022, that “contrary to the previous globalisation drive, the emergence of unilateral and protectionist policies by certain governments are complicating the geopolitical landscape and adding to risk of global economic decline”. He added that “multinational corporations such as CAO will undoubtedly bear the brunt of this uncertainty, with the need to rethink global operations, investments, expansion, the introduction and utilisation of technology, as well as ensuring funding support for the Group’s overseas operations”.
   
• BRC Asia noted in its 1QFY24 results that “despite continuing concerns about credit risk amid the heightened inflationary environment currently, the strong forecasts for construction demand in Singapore bode well for the local reinforcing steel industry in the short-to-medium term. 
   
• For construction in Australia, Civmec noted with its 1HFY24 results that “tendering activity continues to be strong across all sectors, with the Group focused on securing projects that will allow it to grow its workforce at a sustainable pace”, while also meeting its objectives ”to increase the proportion of the Group’s revenue in maintenance and infrastructure works”.
   
• COSCO SHIPPING International (Singapore) Co noted with its FY23 results that it has been impacted by the global economy and also been affected by higher financing costs. It maintained “it will invest in and build logistics supply chain infrastructure and resources at the appropriate time, expand the logistics supply chain network, and strive to become a leading comprehensive logistics and supply chain service company in the Southeast and South Asia”.

Further Resources and Research

FTSE ST Small Cap Index

• FTSE ST Small Cap Index Rules (requires registration at www.lseg.com/en/ftse-russell/indices)
• FTSE ST Small Cap Index Review March 2024 Changes (requires registration at www.lseg.com/en/ftse-russell/indices)

Recent Financial Results/Business Updates

• BRC Asia: BRC Asia 1QFY24 Business Update | BRC Asia FY23 Annual Report
• China Aviation Oil: China Aviation Oil (Singapore) Corporation FY23 Results
• Civmec: Civmec 1HFY24 Results
• COSCO SHIPPING International: COSCO SHIPPING International (Singapore) Co FY23 Results
• HRnetGroup: HRnetGroup FY23 Results
• Samudera Shipping Line: Samudera Shipping FY23 Results| Samudera Shipping Line FY23 Analyst Briefing
• SingPost: Singapore Post 3QFY24 Business Update

Related Analyst Reports

• 2024 SG Strategy: Phillip Capital - 2024 Singapore Strategy: The Federal Reserve Got Your Back
• BRC Asia: CGS-CIMB - BRC Asia Ltd Update : Volumes remain healthy | DBS - BRC Asia Update : Robust orderbook and site progress key drivers for FY24
• Boustead Singapore: OCBC - Boustead Singapore Update : State of grace
• China Aviation Oil: Lim & Tan Securities - China Aviation Oil Initiation : Time to fly! | OCBC - China Aviation Oil Update : Awaiting clearer skies
• Civmec: Lim & Tan Securities - Civmec Update : Ample Opportunities Across All Sectors
• HRnetGroup: DBS - Singapore Industry Focus : HRnet Group - Labour market loses momentum amid economic headwinds

Company interviews

• Beng Kuang Marine: Beng Kuang Marine Charts Transformation Journey
• China Aviation Oil: China Aviation Oil Fuels Up for Next Stage of Growth
• Civmec: Civmec: Engineering Resilient Long-Term Growth
• Marco Polo Marine: 10 in 10 with Marco Polo Marine - Voyage into a sustainable future

Note the corporate announcements and analyst research are sourced from sgx.com and research and reports and in some cases were uploaded more than six months ago. For instance the above DBS report on HRnetGroup was posted in June 2023 and the Lim & Tan Civmec Report was posted in May 2023.

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