• Singapore's manufacturing sector saw a reduced contraction of 0.7% in the first five months of 2024, improving from a 4.3% contraction the previous year. This is despite a 4.0% drop in Singapore’s NODX during the same period, largely due to tighter financial markets impacting global demand. 
   
• While the iEdge SG Adv Manufacturing Index has declined 1.0% in total return in 2024 (up to 8 July), the Index has recovered 9.0% since 19 April, with the 2024 (up to 8 July) combined average daily turnover of the Index constituents also up 9% from 2023 levels. 
   
• The iEdge SG Adv Manufacturing Index has also booked more than S$90 million of net institutional inflow in 2024 (up to 8 July) led by net inflows to YZJ Shipbldg, ST Engineering, Venture, SATS and ThaiBev, while Beng Kuang Marine, Dyna-Mac, Frencken, Global Invacom and Marco Polo Marine saw highest net inflow relative to market cap.
   

Singapore's Manufacturing Landscape: Trends and Trajectories

Singapore’s Industrial Production (IP) has narrowed down its 4.3% contraction from last year with a slight 0.7% decline in the first five months of 2024. The impact of tighter financial markets has persisted in dampening global demand, which has also led to a 4.0% drop in Singapore’s NODX in the first five months of 2024. While the S&P Global ASEAN Manufacturing PMI has shown that the region’s output and new orders are still expanding, this is mainly driven by domestic demand. However, there is still cautious optimism, and the global rate outlook is tied to less restrictive financial conditions, despite some recent indications of a rise in input costs and output prices. UOB presently expect that Singapore NODX will grow 4.5% for the 2024 year. 

In Singapore’s May IP report, a low base effect and higher orders boosted semiconductor output by 21% YoY and computer peripherals and data storage by 25% YoY. The Ministry of Trade and Industry (MTI) has consistently expected that as global electronics demand rebounds, Singapore's manufacturing and trade-related sectors will see a gradual improvement in growth. MTI also expects the wholesale trade sector's machinery, equipment, and supplies segment to benefit from increased external demand for electronic components and telecommunications and computers. The Transport Engineering cluster has remained the most resilient cluster of Singapore’s IP in recent years. 

The chart below shows that the iEdge SG Advanced Manufacturing Net Total Return Index has had a more subdued performance in the last 18 months, that has been relatively consistent with weaker manufacturing and NODX figures. 

On the longer-term structural side, there has been a resurgence in global industrial-led policies. As relayed by the IMF in April, governments are re-evaluating the role of state intervention in the economy to bolster strategic sectors and address issues like supply chain resilience, economic security, and climate change. This shift is evident in significant legislative moves such as the US CHIPS and Science Act, the EU's semiconductor investment, and China’s trade-in programs, reflecting a broader trend towards leveraging industrial policy for strategic economic development. For manufacturing-related businesses, this structural shift can open up new markets and funding opportunities, but they also pose challenges in terms of adapting to new regulations and competitive landscapes.

20 Largest Weights of the iEdge SG Advanced Manufacturing Index

The constituents of the iEdge SG Advanced Manufacturing Index represent multiple sectors, that incorporate the industrials sector (covering a wide range of businesses including transport engineering), technology, materials and resources, food and beverage and healthcare, much like Singapore’s IP. The index is also responsive to both local and regional developments.

Inclusion in the iEdge SG Advanced Manufacturing Index signifies a stock's engagement in manufacturing. Eligibility for the index requires a minimum of 40% of a company's revenue to originate from manufacturing-related activities. For existing index constituents, this criterion is relaxed to 30%, acknowledging their ongoing contribution to the manufacturing sector. 

The 20 largest weights of the iEdge SG Advanced Manufacturing Index are tabled below. Together these 20 stocks comprise around 90% of the Index weights, in addition to 90% of the combined average daily turnover (ADT) of the Index in the 2024 year (up to 8 July). 

Note ADT refers to average daily turnover, NIF refers to Net Institutional Inflow, TR refers to Total Return.
All Data as of 8 July 2024
Source: SGX, Refinitiv, Bloomberg.

Stocks that ranked among the 20 most traded stocks of the Index, however are not among the 20 largest weights of the Index included AEM Holdings, Dyna-Mac Holdings, Nanofilm Technologies International, Medtecs International and Food Empire Holdings. These five stocks have generated mixed returns in the 2024 year (up to 8 July), from a 47% decline in total return for AEM Holdings to a 50.9% gain for Dyna-Mac Holdings.

iEdge SG Advanced Manufacturing Index booked more than S$90 million Net Institutional Inflow in 2024 (to 8 July) 

The iEdge SG Advanced Manufacturing Index has booked more than S$90 million net institutional inflow in 2024 (up to 8 July). Flows were mixed, with 9 index constituents booking net institutional inflow for every 8 constituents that booked net institutional outflow. Leading the net institutional inflow for the 2024 year (up to 8 July) within the iEdge SG Advanced Manufacturing Index, were five STI stocks Yangzijiang Shipbuilding, Singapore Technologies Engineering, Venture Corporation, SATS and Thai Beverage:

• Yangzijiang Shipbuilding maintains an ROE of 21% and P/B of 2.4x, compared its 5-year average P/B of 0.9x. For its 1QFY24 Business Update, the Group noted its outstanding orderbook totalled US$16.1 billion, scheduled for delivery between 2024 to 2028. Additionally, the Group anticipates a 9.5% increase in demand for containerships in 2024, driven by environmental regulatory changes and the global necessity for fleet renewal.
   
• Singapore Technologies Engineering maintains an ROE of 24% and P/B of 5.4x, compared its 5-year average P/B of 5.1x. For its 1QFY24 Business Update, the Group highlighted its revenue increased 18% YoY, and new contract wins for the quarter totalled S$3.0 billion, bringing the total orderbook to S$27.0 billion. 
   
• Venture Corporation maintains an ROE of 10% and P/B of 1.5x, compared its 5-year average P/B of 1.9x. For its 1QFY24 Business Update, the Group highlighted its revenue was S$667 million, due to lower overall customer demand amid some remaining headwinds, which are beginning to taper off. The Group added it is targeting for revenue to improve on a sequential basis from the 1QFY24 to 2QFY24. In addition, the Group expects revenue will be “higher in the second half of 2024 compared to the first half of 2024”. Venture Corporation reports its 1HFY24 results on 6 August, after the market close. 
   
• SATS maintains an ROE of 2% and P/B of 1.9x, compared its 5-year average P/B of 2.5x. In its FY24 (ended 31 March) Financials, SATS reported its revenue increased 3-fold to a record S$5.1 billion due to the robust aviation sector recovery and consolidation with Worldwide Flight Services (WFS).
   
• Thai Beverage maintains an ROE of 14% and P/B of 1.5x, compared its 5-year average P/B of 2.7x. In its 1HFY24 (ended 31 March) Financials, the Group highlighted its sales revenue remained flat at -0.4% YoY amidst a challenging economic situation, however observed conditions in Thailand’s beverage industry gradually improved in 1H24, on the back of the continued recovery of the tourism sector.

Note links are provided on the five stock names above to the stock screener which includes Refinitiv consensus estimates target prices. The consensus represents the average of individual estimates provided by analysts covering the stock and estimates typically represent an analyst's opinion of the stock performance over the next 18 months.

Out of the 20 Index stocks that experienced the highest net institutional inflow in 2024 (up to July 8), 15 also featured among the stocks with the highest net inflow relative to their market capitalisation as of 8 July. The list below details the 20 stocks that received the highest 2024 year-to-date net institutional inflow, in proportion to their market value on 8 July.

Note ADT refers to average daily turnover, NIF refers to Net Institutional Inflow, TR refers to Total Return, ^denotes on SGX Watchlist
All Data as of 8 July 2024.
Source: SGX, Refinitiv, Bloomberg.

Further Resources and Research 

• Weekly Fund Flow Report: Data Reports - Singapore Exchange (SGX)
• iEdge SG Advanced Manufacturing Index: Factsheet| Methodology

Recent Financial Results/Business Updates

• SATS: SATS FY2023 Annual Report 
• YZJ Shipbldg: YZJ Shipbldg Business Update 1Q2024 | YZJ Shipbldg Annual Report 2023
• ST Engineering: ST Engineering 1Q2024 Market Updates| ST Engineering Annual Report 2023 
• Venture: Venture Corporation Business Update 1Q2024 | Venture Corporation Annual Report 2023
• ThaiBev: Thai Bev 1HFY2024 Financial Results 
• Beng Kuang: Beng Kuang 1Q2024 Corporate Highlights | Beng Kuang Annual Report 2023 
• Dyna-Mac: Dyna-Mac Annual Report 2023
• Frencken: Frencken 1Q24 Business Update | Frencken Annual Report 2023 
• G Invacom: G Invacom Annual Report 2023 
• MarcoPolo Marine: MarcoPolo Marine 1HFY2024 

Related Analyst Reports

• SATS:  DBS – SATS Update: Outperformance across all metrics
• YZJ Shipbldg: CGS-CIMB – Yangzijiang Shipbuilding update: “Clean”-ing up the orderbook
  DBS – Yangzijiang Shipbuilding update: Making New Highs
• ST Engineering: DBS – ST Engineering update: Record profits with room for growth
• Venture: DBS – Venture Corporation update: Improving outlook
• ThaiBev: DBS – Thai Beverage Public Company Update: Early green shoots of beer business recovery
• Dyna-Mac: OCBC – Dyna-Mac Holdings Update: Order wins galore 
• Frencken: OCBC – Frencken Group Initiation: Turn up the semiconductor cycle
• MarcoPolo Marine: Maybank – Marco Polo Marine Update: Superb 1H24, outlook positive

Company interviews 

• Dyna-Mac: kopi-C with Dyna-Mac’s CEO: ‘We went from near-bankruptcy to having a record order book’ 
   

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