• The iEdge-OCBC Singapore Low Carbon Select 50 Capped Index has generated a 9% total return in the 2024 year through to June 11, and outpaced the STI since the end of 2019. 2019. Debuting in 2022, the Lion-OCBC Securities Singapore Low Carbon ETF tracks this Index. This ETF is an EIP and can be traded in SGD and USD.
   
• Among the 50 Index constituents are 23 STI stocks, in addition to 8 Singapore-listed companies and 13 trusts of the S-REIT Sector not within the STI. As many as 20 of the 21 of the SGX-listed/non-STI stocks were trading below Refinitiv Consensus Estimate TPs as of 11 June, and all 21 trading below 5-year P/B ratios. The Index includes another 6 stocks listed on international exchanges that are either domiciled or incorporated in Singapore.  
   
• Of the 21 SGX-listed/non-STI stocks, StarHub performed the strongest in the 2024 year to 11 June, with a 16% total return. StarHub is evolving from a traditional telco to a dynamic digital ecosystem player, embracing cloud computing, cybersecurity, AI, and IoT. For its FY23, StarHub achieved its DARE+ milestone of S$150 million in attributable net profit and also made tangible progress in its decarbonisation commitment. 
   

The iEdge-OCBC Singapore Low Carbon Select 50 Capped Index generated a 9% total return in the 2024 year through to June 11, taking its indicative 12-month total return to 12%. This takes the total return of the Lion-OCBC Securities Singapore Low Carbon ETF that tracks the Index, to 8%, with the 12-month total return at 11%. 

Since the end of 2019, the daily moves of the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index have maintained an high level of correlation to the Straits Times Index (STI), with an R-squared of 0.72. At present there are 23 STI constituents within the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index that currently make up 67% of the Index. The index methodology, and inclusion of another 27 constituents has provided enough differentiation to see the iEdge-OCBC Singapore Low Carbon Select 50 Capped Net Total Return Index outpace the STI Total Return Index since the end of 2019, with a 49% total return compared to the STI’s 24% total return. 

Methodology & Decarbonisation Frameworks

The iEdge-OCBC Singapore Low Carbon Select 50 Capped Index emphasises decarbonisation by reducing its Weighted Average Carbon Intensity (WACI) exposure. Constituents are evaluated and excluded based on their fossil fuel involvement and carbon intensity relative to their Sector. Sustainalytics provides the data for assessing companies' fossil fuel involvement and carbon intensity. More details on the Index methodology can be found here. 

The ASEAN region’s energy consumption is expected to grow in scale in-line with its economic development. The region faces rich opportunities as it embarks on its pathway to decarbonise while remaining competitive as outlined in the ASEAN Strategy for Carbon Neutrality that was adopted in September 2023 by AEC Council Ministers. The journey is not always smooth sailing. For instance, Grab Holdings notes that while there has been some progress in recent years on EV adoption, fostering an EV ecosystem in Southeast Asia remains challenging as the infrastructure to support this shift is not as advanced or coordinated as compared to the other parts of the world. Grab Holdings noted that in 2023, 6.3% of all distance travelled was on low or zero emission modes of transport which reduced ~71,000 tCO2e through use of these modes of transport. Nonetheless, Grab Holdings continues to work with strategic partners to make EVs more accessible to its driver-partners, either through rentals or financing. At the same time it is also working with energy providers and other partners to improve charging infrastructure.

Index Constituents

Currently the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index constituents are subject to a 7% cap at index rebalancing, ensuring diversification, while limiting concentration risk. There is a provision for mega cap stocks to have their weight increased to 10%, however the threshold provision is for the stock to maintain at least US$200 billion in market cap. DBS Group Holdings currently maintains the largest market cap of the Index at S$101 billion (US$75 billion). 

Singapore-listed stocks comprise just over 75% of the Index, with the remainder international-listed stocks that are either domiciled or incorporated in Singapore. The latter group of six stocks comprise of Sea Ltd ADR, in addition to the international listings of Flex, Grab Holdings, BOC Aviation, Kulicke & Soffa Industries Inc and JOYY Inc ADR. Performances of these six stocks for the 2024 year through to 11 June has varied from an 81% gain for Sea Limited to a 29% decline for JOYY Inc ADR. 

The ETF

The Lion-OCBC Securities Singapore Low Carbon ETF is traded in both SGD (ESG) and USD (ESU) counters. As of 31 May 2024, the ETF maintained an AUM of S$61 million. The expense ratio for the ETF is capped at 0.45% per annum for 3 years from the inception of the Fund. The ETF is an Excluded Investment Product (EIP) and can be invested in using cash or the Supplementary Retirement Scheme.

According to the SGX ETF market highlights for Q4 2023, the Lion-OCBC Securities Singapore Low Carbon ETF achieved the highest returns among Singapore equities ETFs listed on SGX in 2023. The ETF extended its performance this year – also delivering the best return among Singapore equities ETFs based on SGX ETF market highlights for Q1 2024.

Segment of 21 Non-STI Singapore-listed Index Constituents 

Within the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index are 23 STI stocks, the aforementioned 6 international listings and another 21 SGX-listed/non-STI stocks. 

As of 11 June, all 21 SGX-listed/non-STI stocks were trading at Price-to-Book (P/B) ratios which are below 5-year averages. This saw NetLink NBN Trust's P/B ratio slightly below its 5-year average, indicating a marginal discount, whilst the P/B ratio of AEM Holding stands at 1.3x, which is significantly lower than its historical average of 3.8x. Of the 21 stocks, AEM Holdings also ended the 11 June closest to its Reuters Consensus Estimate Target Price (RCETP), whereas CapitaLand China Trust ended the session furthest away from its target price. Note RCETPs represent the average of individual estimates provided by analysts covering the stock, with estimates typically representing an analyst's opinion of the stock performance over the next 18 months.

Combined the 21 SGX-listed/non-STI stocks, comprise less than 10% of the Index weights. Their recent performances and flows are tabled below with stocks sort by performances in the 2024 year through to 11 June.  

Note ADT refers to average daily turnover, NIF refers to Net Institutional Inflow, TR refers to Total Return, RCETP refers to Reuters Consensus Estimate Target Price. 
All Data as of 11 June 2024; Source: SGX, Refinitiv, Bloomberg.

Of the 21 SGX-listed/non-STI stocks tabled above, StarHub has been the strongest performer for the 2024 year through to June 11 with a 16% total return. 

As noted in April, StarHub is evolving from a traditional telecommunications provider to a dynamic digital ecosystem player, embracing cloud computing, cybersecurity, artificial intelligence, and IoT. For its FY23, StarHub achieved its DARE+ milestone of S$150 million in Net Profit Attributable to Shareholders, a target set at the end of FY21. In its 1QFY24 Business Update, StarHub highlighted its net profit had gained 8% from 1QFY23 to S$40 million, excluding the D’crypt business which was sold in February 2024. StarHub has also ranked among the 20 SGX-listed stocks that have booked the highest net institutional inflow in 1H24. As of 11 June, the stock maintained an ROE of 26%, P/E of 15x and dividend yield of 5.1%.

In its FY23 Annual Report, StarHub highlighted that it has also made tangible progress in its decarbonisation commitment. The Group noted that its near- and long-term targets were validated and approved by the Science Based Targets initiative (SBTi) in November 2023. To achieve these new ambitious targets, StarHub also released its inaugural Climate Transition Plan, which lays out its initiatives ranging from energy optimisation, green products and services, climate resilience, and sustainable financing. 

Further Resources and Research 

• Weekly Fund Flow Report: Data Reports - Singapore Exchange (SGX) 

Recent Financial Results/Business Updates

• StarHub: StarHub 1QFY2024 Business Performance Update| StarHub Annual Report 2023 
• NetLink NBN Trust: NetLink NBN Trust FY2024 Results Presentation| NetLink NBN Trust 2HFY2024 Interim Financial Results
• First Resources: First Resources 1QFY2024 Production and Financial Highlights | First Resources Annual Report 2023 
• AIMS APAC REIT: AIMS APAC REIT FY2024 Financial Results Presentation | AIMS APAC REIT FY2024 Interim Financial Statements
• ParkwayLife REIT: ParkwayLife REIT 1QFY2024 Business Update | ParkwayLife REIT FY2023 Annual Report 
• Raffles Medical Group: Raffles Medical Group Annual Report 2023 

Related Analyst Reports

• StarHub: CGS-CIMB - Starhub update : Dare+ investments brought forward | DBS - Singapore Industry Focus : Telecom Sector Consolidation? - Scenario analysis of a StarHub-M1 merger
• NetLink NBN Trust: CGS-CIMB - NetLink NBN Trust Update : Finalised ICO pricing removes overhang  
• AIMS APAC REIT: DBS - AIMS APAC REIT update : Organic growth initiatives to commence 
• Parkway Life REIT: OCBC - Parkway Life REIT Update : A stellar start to the year | DBS - Parkway Life Real Estate Investment Trust update : Never going out of "Style” 
• Raffles Medical Group: DBS - Raffles Medical update : Normalised to pre-COVID levels 

Company interviews 

• StarHub: kopi-C with StarHub’s CEO: “There’s no other telco like ours”
• AIMS APAC REIT: Kopi-C with AIMS APAC REIT’s CEO: ‘Property is a people business’ 
   

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