After looking at the Top 3 performers of the STI in 2014, we felt that it would be fitting to explore who was at the bottom of the pile over the course of 2014. Compared to the top 3 which might surprise some of us, the bottom three sorta picked themselves.
Without further ado, let us present to you the laggards of the STI for the year of 2014 (Note: This list was compiled without considering the effect of dividends) starting off with:
1) Genting Singapore PLC (SGX:G13)
Genting Singapore is one of the two licensed casino operators allowed in Singapore. As a Group, Genting Singapore is best known for their flagship project Resorts World Sentosa operating as in integrated resort offering a Universal Studios theme park, a Maritime Museum, a convention centre as well as six unique hotels!
However with gaming revenue coming down (Meaning the house won less often) for Q32014 flowing down to a steep drop in profits and cash from operations has led to a YTD 29% dip in share price. This drop was partially attributed to China’s corruption crackdown and economic slowdown in 2014 – affecting the revenue source from Chinese high rollers.
The company isn’t standing and are currently developing an integrated resort in Jeju, South Korea – Resorts World Jeju slated to open progressively only in 2017. In the meantime, growth would have to come organically from what they have.
2) Sembcorp Marine Limited (SGX:S51)
Sembcorp Marine was hit much more than its competitor listed on the STI (Next on the list!) as it was a pure-play on the offshore marine business. Sembcorp Marine is a leading global marine and offshore engineering group, specializing in a full spectrum of integrated solutions in ship repair, ship building, ship conversion, rig building and offshore engineering & construction.
Ok to simplify things – Sembcorp Marine is basically in the business of supporting the oil industry. Demand for oil-linked products is good = more customers; otherwise not so good. And the plunge in oil prices led to a not so good year with a YTD price decline of 28%!
3) Keppel Corporation Limited (SGX:BN4)
No prizes to anyone who knows the reason behind Keppel’s 23% stock price plunge over the course of 2014. Same as Sembcorp Marine, Keppel was also involved in the Oil & Gas industry. However, Keppel was a much more diversified entity as compared with Sembcorp Marine with only 58% of FY2013 Revenue from Offshore & Marine operations. On a net profit basis, Offshore & Marine still made up a significant 66% of their total net profits. However this was still more diversified compared to Sempcorp Marine which could attribute to the difference in price decline.
With the oil industry being a cyclical industry, there would inevitably be ups and downs and market sentiment at the moment appeared to correspond to a downswing in operations.
Value In Action
We all know of the saying, “What goes up has to come down”. But what about those that have gone down? Will they go up again? Let us find out in 2015!
A parting note would be that if you think that nothing much has changed fundamentally other than the price drop, this would just prove to be an opportunity for investors to get more of a good thing 🙂
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All views and opinions articulated in the article were expressed in Mun Hong’s personal capacity and do not in any way represent those of his employer and other related entities. Mun Hong does not own any shares in the companies mentioned above.
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