Five stocks most leveraged to India average 8% YTD gain
The 15 stocks listed on SGX that recently reported more than one-tenth of revenue from India or South Asia have averaged a 10.7% YTD gain, taking the average one-year total return to 40.0%.
The strongest performer in the group in the year-to-date is Junma Tyre Cord Company, which saw its stock move from 6.26 cents to 16.75 cents following an exit offer by Yang Cong to acquire an additional 21.6% stake in Junma for S$3.2M.
The five stocks that have reported more than half their revenue from India - Indiabulls Properties Investment Trust, Religare Health Trust, Ascendas India Trust, Sarine Technologies and Smartflex Holdings - have averaged a 7.8% YTD gain.
On the India economic front, the Modi government has formalised an inflation target with the central bank, setting the target for financial year through March 2017 and subsequent years at 4%, plus or minus 2%.
The inflation, growth and the interest rate outlook for India has recently been updated following the Modi government budget and subsequent inflationary reports. On the inflation front, the Modi government has formalised an inflation target with the Reserve Bank of India, setting the target for financial year through March 2017 and subsequent years at 4%, plus or minus 2%. India’s February consumer price growth accelerated to 5.37%, after a revised 5.19% increase in January. Meanwhile February wholesale prices fell 2.06% year-on-year, the most since at least 2005, and January industrial output rose 2.6%. On the growth front, the Modi government forecasts FY15 GDP growth at 7.4%, FY16 at 8.1%-8.5%. Meanwhile, the IMF sees India’s GDP rising 7.2% in year through March, and 7.5% the following year, below government estimates. The Finance Minister Mr. Arun Jaitley has stated that interest rates in India have to “moderate”.
SGX stocks with India business
As noted in the Market Update - Five stocks with India business average 6.2% YTD gain (click here), Singapore Exchange (SGX) lists a number of stocks that have geographically segmented revenue from India in recent Annual Reports. Of this group of stocks, 15 segmented more than one-tenth of their revenue to India or South Asia in recent annual statements.
Together the 15 stocks have averaged a 10.8% total return in the 2015 year through to the 18 March close. The four stocks that have segmented more than half their revenue to India have averaged a 7.8% gain in the year thus far. The wider average of 10.8% is skewed due to Catalist stock Junma Tyre Cord Company gaining 197% in the year thus far. Junma Tyre Cord Company saw its stock move from 6.26 cents to 16.75 cents following an exit offer by Yang Cong to acquire an additional 21.6% stake in Junma Tyre Cord Company for S$3.2M.
Yang Cong exit offer to acquire 21.6% stake in Junma Tyre Cord Company
Yang Cong made an exit offer to acquire additional 21.6% stake in Junma Tyre Cord Company for SGD 3.2 million in cash on 10 March 2015. Yang Cong owns a 0.86% stake and will acquire additional 15.9 million shares at the price of SGD 0.20 per share. On completion of the offer, Junma Tyre Cord Company will be delisted. As noted in the announcement details on SGX StockFacts the offer is subject to SGX agreeing to the application by Junma Tyre Cord Company to delist from SGX, shareholders approval of Junma Tyre Cord Company and the delisting resolution not being voted against by 10% or more of the total number of shares held by the shareholders of Junma Tyre Cord Company.
One third of the 15 stocks are listed on the Catalist board. The Catalist Board is a proven platform for small and new companies that are slated to grow their business in future years. Catalist caters to the capital formation requirements of fast-growing enterprises. There are no quantitative entry criteria required by SGX and companies seeking a primary listing on Catalist must be brought to list by approved Sponsors via an Initial Public Offering (IPO). Thus, Sponsors determine the suitability of applicants to be listed. The Catalist stocks are OSIM International, WE Holdings, Adventus Holdings, Junma Tyre Cord Company and International Press Softcom.
