SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<ul><li>Global consumer non-cyclical stocks have ranked among the three most strongest performing sectors since the global spotlight on US regional banks began on 9 March through to 5 May.</li><li>At the same time, the consumer cyclical sector has ranked among the three most strongest performing sectors since the beginning of 2023.</li><li>Over the past 17 weeks, Golden Agri-Resources ranked as Singapore’s fifth most traded consumer stock while booking the tenth highest net institutional inflow across the Singapore stock market and generating a 6% total return.</li></ul>

Global consumer non-cyclical stocks have ranked among the three most strongest performing sectors since the global spotlight on US regional banks began on 9 March through to 5 May.At the same time, the consumer cyclical sector has ranked among the three most strongest performing sectors since the beginning of 2023.Over the past 17 weeks, Golden Agri-Resources ranked as Singapore’s fifth most traded consumer stock while booking the tenth highest net institutional inflow across the Singapore stock market and generating a 6% total return.

Jardine Matheson Southeast Asia / Equity Bottom-Up

Jardine Matheson Southeast Asia (JCNC SP)

<ul><li>Singapore’s five most traded consumer cyclical stocks include Genting Singapore, Jardine Cycle & Carriage, NIO Inc, The Hour Glass and MM2 Asia.</li><li>These five consumer cyclical stocks have seen S$279 million in combined YTD net fund flow, with Jardine Cycle & Carriage seeing the highest inflow.</li><li>Globally, the market value of consumer cyclical stocks is greater than consumer non-cyclical stocks, while also maintaining higher historical volatility.</li></ul>

Singapore’s five most traded consumer cyclical stocks include Genting Singapore, Jardine Cycle & Carriage, NIO Inc, The Hour Glass and MM2 Asia.These five consumer cyclical stocks have seen S$279 million in combined YTD net fund flow, with Jardine Cycle & Carriage seeing the highest inflow.Globally, the market value of consumer cyclical stocks is greater than consumer non-cyclical stocks, while also maintaining higher historical volatility.

10 Consumer Plays that Averaged 11% YTD Gains on S$377M Net Fund Inflows

<ul><li>The FTSE ST Small Cap Index consists of more than 50 stocks, with the majority of the constituents maintaining a market cap of between S$2 billion and S$200 million.</li><li>The FTSE ST Small Cap Index constituents have attracted S$250 in aggregate net institutional outflows in the 2022 YTD.</li><li>With the FTSE ST Small Cap Index generating a decline of 8% in total return in the 2022 year to 26 August, the 52 constituents have drawn in aggregate S$250 million of net institutional outflow.</li></ul>

The FTSE ST Small Cap Index consists of more than 50 stocks, with the majority of the constituents maintaining a market cap of between S$2 billion and S$200 million.The FTSE ST Small Cap Index constituents have attracted S$250 in aggregate net institutional outflows in the 2022 YTD.With the FTSE ST Small Cap Index generating a decline of 8% in total return in the 2022 year to 26 August, the 52 constituents have drawn in aggregate S$250 million of net institutional outflow.

Riverstone, Hour Glass & Chip Eng Seng Led Small Cap Index Fund Flows in YTD

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    <div class='content-caption'>Share Buybacks</div>
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<p>FOR the 5 trading sessions that spanned Jul 22 to 28, the Straits Times Index (STI) gained 2.2 per cent, with the FTSE China A50 Index declining 0.8 per cent, the Hang Seng Index declining 0.6 per cent and the FTSE Bursa Malaysia KLCI gaining 2.3 per cent.</p>

<p>Overall, institutions were net sellers of Singapore stocks over the 5 sessions with S$111 million of net outflows, following on from S$65 million of net inflow for the preceding 5 sessions. Singapore Telecommunications, CapitaLand Integrated Commercial Trust, Oversea-Chinese Banking Corporation, Yangzijiang Financial Holding and Wilmar International led the net institutional outflows for the 5 sessions through to Jul 28.  Meanwhile, Yangzijiang Shipbuilding (Holdings), Mapletree Industrial Trust, AEM Holdings, Genting Singapore and Frasers Logistic &amp; Commercial Trust led the net institutional inflows for the 5 sessions through to Jul 28.</p>

<p><strong>Share buybacks</strong></p>

<p>There were 8 primary-listed stocks conducting share buybacks over the 5 sessions ending Jul 28, with a total consideration of S$1.2 million, a similar pace to the S$1.7 million filed for the preceding 5 sessions. iFAST Corporation, The Hour Glass and Valuetronics Holdings led the consideration tally. iFAST Corporation’s buyback of 106,900 shares on Jul 25 at an average price of S$3.75 per share was the company’s second filed buyback on the current mandate, with the preceding buyback of 400,000 shares on Apr 26. The previous buyback mandate saw iFAST Corporation buy back 0.22 per cent of its issued shares (excluding treasury shares). Meanwhile, The Hour Glass has bought back 3.49 per cent of its shares on the current buyback mandate through to Jul 28. Its buybacks between Jul 24 and 26 were conducted at an average price of S$2.15 per share. For its FY22 (ended Mar 31), The Hour Glass recorded a robust 39 per cent increase in sales to S$1.03 billion, which resulted in its after-tax profit rising by 86 per cent to S$157.0 million. The group believes that demand momentum will remain buoyant and continues its focus on organic development throughout the Asia-Pacific region.</p>

<p><strong>Director and substantial shareholder transactions</strong> </p>

<p>The 5 trading sessions saw over 80 changes to director interests and substantial shareholdings filed for more than 30 primary-listed stocks. This included 6 company director acquisitions with no disposals filed, while substantial shareholders filed 9 acquisitions and 5 disposals.</p>

<p><strong>iFAST Corporation</strong></p>

<p>On Jul 26, iFAST Corporation chairman and chief executive officer Lim Chung Chun acquired 34,100 shares of the company for a consideration of S$129,474. At an average price of S$3.80 per share, the acquisition took his total interest from 20.30 per cent to 20.31 per cent. His preceding acquisitions included 60,000 shares at S$4.69 per share on Apr 27, and 50,000 shares at S$5.96 per share on Feb 15.</p>

<p>On Jul 23, iFAST Corporation reported its net revenue for Q2 2022 grew 13.3 per cent year on year to S$29.86 million, despite the group noting global financial markets had gone through a very difficult period. The Q2 2022 net revenue included an initial contribution of S$3.92 million from iFAST Global Bank in the UK. iFAST Corporation is a wealth management fintech platform, with assets under administration of S$17.68 billion as of 30 Jun, 2022. The main business divisions of the group include the business-to-consumer (B2C) division, the business-to-business (B2B) division, and the fintech solutions/business-to-business-to-consumer model. Lim co-founded the company with the launch of its B2C division Fundsupermart.com in Singapore in 2000, following which the B2B division iFAST Financial was launched in 2001. He subsequently led the company’s regional expansion efforts, extending iFAST Corporation’s presence beyond Singapore to Hong Kong, Malaysia, China and India, building a well-established fintech ecosystem across the 5 markets.</p>

<p><strong>Tung Lok Restaurants (2000)</strong></p>

<p>Between Jul 21 and 26, Tung Lok Restaurants (2000) non-executive director Sam Goi Seng Hui acquired 97,600 shares of the company at 11.5 cents per share. With a consideration of S$11,217, this took Goi’s total interest in the award-winning restaurateur from 19.77 per cent to 19.80 per cent.</p>

<p>Goi is also the executive chairman of Tee Yih Jia Food Manufacturing, mainboard-listed GSH Corporation, PSC Corporation and Tat Seng Packaging Group.  He is also the vice-chairman of mainboard-listed Envictus International Holdings and JB Foods.</p>

<p>Tung Lok Restaurants (2000) currently operates 34 outlets of which 25 are directly owned, 3 are held by its associates and 6 others are under license/franchise. These restaurants are spread across Singapore, Indonesia, Japan, Vietnam and the Philippines, with the group’s business predominantly based in Singapore. While consolidating its outlet portfolio, the group has also been focusing its efforts to accelerate its digital transformation initiatives to streamline and optimise internal operational processes to improve productivity. Some digital solutions adopted in its FY22 (ended Mar 31) included virtual queuing systems, robot waiters, mobile ordering systems and voucher management systems.<br>
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<p><strong><em>Inside Insights is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/ifast-leads-buybacks-as-chairman-also-adds-to-stake">read</a> the original version</em></strong></p>
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    Share Buybacks


FOR the 5 trading sessions that spanned Jul 22 to 28, the Straits Times Index (STI) gained 2.2 per cent, with the FTSE China A50 Index declining 0.8 per cent, the Hang Seng Index declining 0.6 per cent and the FTSE Bursa Malaysia KLCI gaining 2.3 per cent.

Overall, institutions were net sellers of Singapore stocks over the 5 sessions with S$111 million of net outflows, following on from S$65 million of net inflow for the preceding 5 sessions. Singapore Telecommunications, CapitaLand Integrated Commercial Trust, Oversea-Chinese Banking Corporation, Yangzijiang Financial Holding and Wilmar International led the net institutional outflows for the 5 sessions through to Jul 28.  Meanwhile, Yangzijiang Shipbuilding (Holdings), Mapletree Industrial Trust, AEM Holdings, Genting Singapore and Frasers Logistic &amp; Commercial Trust led the net institutional inflows for the 5 sessions through to Jul 28.

Share buybacks

There were 8 primary-listed stocks conducting share buybacks over the 5 sessions ending Jul 28, with a total consideration of S$1.2 million, a similar pace to the S$1.7 million filed for the preceding 5 sessions. iFAST Corporation, The Hour Glass and Valuetronics Holdings led the consideration tally. iFAST Corporation’s buyback of 106,900 shares on Jul 25 at an average price of S$3.75 per share was the company’s second filed buyback on the current mandate, with the preceding buyback of 400,000 shares on Apr 26. The previous buyback mandate saw iFAST Corporation buy back 0.22 per cent of its issued shares (excluding treasury shares). Meanwhile, The Hour Glass has bought back 3.49 per cent of its shares on the current buyback mandate through to Jul 28. Its buybacks between Jul 24 and 26 were conducted at an average price of S$2.15 per share. For its FY22 (ended Mar 31), The Hour Glass recorded a robust 39 per cent increase in sales to S$1.03 billion, which resulted in its after-tax profit rising by 86 per cent to S$157.0 million. The group believes that demand momentum will remain buoyant and continues its focus on organic development throughout the Asia-Pacific region.

Director and substantial shareholder transactions 

The 5 trading sessions saw over 80 changes to director interests and substantial shareholdings filed for more than 30 primary-listed stocks. This included 6 company director acquisitions with no disposals filed, while substantial shareholders filed 9 acquisitions and 5 disposals.

iFAST Corporation

On Jul 26, iFAST Corporation chairman and chief executive officer Lim Chung Chun acquired 34,100 shares of the company for a consideration of S$129,474. At an average price of S$3.80 per share, the acquisition took his total interest from 20.30 per cent to 20.31 per cent. His preceding acquisitions included 60,000 shares at S$4.69 per share on Apr 27, and 50,000 shares at S$5.96 per share on Feb 15.

On Jul 23, iFAST Corporation reported its net revenue for Q2 2022 grew 13.3 per cent year on year to S$29.86 million, despite the group noting global financial markets had gone through a very difficult period. The Q2 2022 net revenue included an initial contribution of S$3.92 million from iFAST Global Bank in the UK. iFAST Corporation is a wealth management fintech platform, with assets under administration of S$17.68 billion as of 30 Jun, 2022. The main business divisions of the group include the business-to-consumer (B2C) division, the business-to-business (B2B) division, and the fintech solutions/business-to-business-to-consumer model. Lim co-founded the company with the launch of its B2C division Fundsupermart.com in Singapore in 2000, following which the B2B division iFAST Financial was launched in 2001. He subsequently led the company’s regional expansion efforts, extending iFAST Corporation’s presence beyond Singapore to Hong Kong, Malaysia, China and India, building a well-established fintech ecosystem across the 5 markets.

Tung Lok Restaurants (2000)

Between Jul 21 and 26, Tung Lok Restaurants (2000) non-executive director Sam Goi Seng Hui acquired 97,600 shares of the company at 11.5 cents per share. With a consideration of S$11,217, this took Goi’s total interest in the award-winning restaurateur from 19.77 per cent to 19.80 per cent.

Goi is also the executive chairman of Tee Yih Jia Food Manufacturing, mainboard-listed GSH Corporation, PSC Corporation and Tat Seng Packaging Group.  He is also the vice-chairman of mainboard-listed Envictus International Holdings and JB Foods.

Tung Lok Restaurants (2000) currently operates 34 outlets of which 25 are directly owned, 3 are held by its associates and 6 others are under license/franchise. These restaurants are spread across Singapore, Indonesia, Japan, Vietnam and the Philippines, with the group’s business predominantly based in Singapore. While consolidating its outlet portfolio, the group has also been focusing its efforts to accelerate its digital transformation initiatives to streamline and optimise internal operational processes to improve productivity. Some digital solutions adopted in its FY22 (ended Mar 31) included virtual queuing systems, robot waiters, mobile ordering systems and voucher management systems. 
 

Inside Insights is a weekly column on The Business Times, read the original version



iFAST leads buybacks, as chairman also adds to stake 

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
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<h2>The Hour Glass Limited</h2>
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<h3>Only Time Will Tell</h3>
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<p>Investment Thesis:</p>
<p>Downgrade to HOLD with TP of S$2.54. The group witnessed a record year in FY22A, driven by a V-shaped recovery in the luxury goods industry as we have expected. FY22A gross and net margins came at a surprise at 32.7% and 15.0% (vs 29.2% and 11.0% in FY21A) respectively. Since our initiation report, Hour Glass’s share price has risen by c. 16%. We reiterate our view of a moderation in revenue in FY23F, on the back of continued macroeconomic uncertainties. For FY23F, we adjusted our gross and net margins estimates to c.30% and c.13.5% (versus initial estimates of 29% and 12%), albeit lower than FY22A’s margins, thereby raising our FY23F earnings by 13%. We downgrade to HOLD as we peg our valuation to a forward PE of 13.5x (versus our initial ratio of 14.5x) in lieu of the uncertain macroeconomic outlook.</p>
<p>Macroeconomic uncertainties as headwinds. Historically, we observed that Hour Glass’s revenue typically witness moderations in growth during periods of economic uncertainties (e.g., Asian/Global Financial Crisis). In our view, we are anticipating similar levels of moderation in revenue growth in FY23F. We believe ongoing recession and inflation fears could pose as headwinds to consumer sentiment.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.



The Hour Glass Limited



Only Time Will Tell



Investment Thesis:
Downgrade to HOLD with TP of S$2.54. The group witnessed a record year in FY22A, driven by a V-shaped recovery in the luxury goods industry as we have expected. FY22A gross and net margins came at a surprise at 32.7% and 15.0% (vs 29.2% and 11.0% in FY21A) respectively. Since our initiation report, Hour Glass’s share price has risen by c. 16%. We reiterate our view of a moderation in revenue in FY23F, on the back of continued macroeconomic uncertainties. For FY23F, we adjusted our gross and net margins estimates to c.30% and c.13.5% (versus initial estimates of 29% and 12%), albeit lower than FY22A’s margins, thereby raising our FY23F earnings by 13%. We downgrade to HOLD as we peg our valuation to a forward PE of 13.5x (versus our initial ratio of 14.5x) in lieu of the uncertain macroeconomic outlook.
Macroeconomic uncertainties as headwinds. Historically, we observed that Hour Glass’s revenue typically witness moderations in growth during periods of economic uncertainties (e.g., Asian/Global Financial Crisis). In our view, we are anticipating similar levels of moderation in revenue growth in FY23F. We believe ongoing recession and inflation fears could pose as headwinds to consumer sentiment.










(Non-SGX Report) The Hour Glass Limited - Only Time Will Tell

Singapore

The Hour Glass is a Singapore-based luxury watch retail group that also deals in jewelry and luxury properties. It operates over 70 boutiques across Asia-Pacific, serving as an official retailer for prestigious watch brands like Rolex, Patek Philippe, and Omega. The company was founded in Singapore in 1979.

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The Hour Glass (HG SP)

Recent Consumer Sector Highlights

Global consumer non-cyclical stocks have ranked among the three most strongest performing sectors since the global spotlight on US regional banks...

Singapore Exchange Ltd (SGX)

10 Consumer Plays that Averaged 11% YTD Gains on S$377M Net Fund Inflows

Singapore’s five most traded consumer cyclical stocks include Genting Singapore, Jardine Cycle & Carriage, NIO Inc, The Hour Glass and MM2...

Singapore Exchange Ltd (SGX)

Riverstone, Hour Glass & Chip Eng Seng Led Small Cap Index Fund Flows in YTD

The FTSE ST Small Cap Index consists of more than 50 stocks, with the majority of the constituents maintaining a market cap of between S$2 billion...

Singapore Exchange Ltd (SGX)

iFAST leads buybacks, as chairman also adds to stake

FOR the 5 trading sessions that spanned Jul 22 to 28, the Straits Times Index (STI) gained 2.2 per cent, with the FTSE China...

Singapore Exchange Ltd (SGX)

(Non-SGX Report) The Hour Glass Limited - Only Time Will Tell

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

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