2 Top-Performing Straits Times Index Stocks in 2022

Singapore Temasek stocks

Tim Phillips

October 5, 2022

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For global investors, Singapore has become a haven from the storm of higher interest rates and inflation.

While the local stock market here isn’t immune to the vagaries of the global economic cycle, the types of stocks that Singapore’s market offers has allowed it to better weather the storm.

The benchmark Straits Times Index (STI) in Singapore, the city state’s key stock market index, is down around 1.5% so far in 2022.

Compare that to the S&P 500 Index in the US – which is down 21% so far this year – and the gulf in performance becomes obvious.

So, for investors here, they may be interested to know that some Singapore stocks have even posted strong gains in 2022.

In fact, two of the best-performing STI constituent stocks in 2022 have posted price returns in the range of 35-50% this year. Let’s find out more about why they’ve been doing so well.

1. Sembcorp Industries – 2022 year-to-date return = 52.7%

I’ve written previously on Sembcorp Industries Limited (SGX: U96) and how they’ve been able to turn around their business.

The owner of power-generating assets, which was spun out from Sembcorp Marine Ltd (SGX: S51), is now able to focus solely on shifting its portfolio towards renewable energy.

While only 25% of its net profit in the first half of 2022 came from renewable/sustainable solutions, management aims to hike that proportion to 70% by 2025.

Not only that but it wants to increase its renewable-generating capacity from the current 5.4 gigawatts (GW) to 10 GW by 2025.

It has backed up its plan with actions. The company recently sold two coal-fired power plants that it owns in India.

Clearly, management is focused on building out its renewables base and reinvesting more capital into clean energy projects given the heightened demand in Asia.

While the company’s share price is up strongly in 2022, it actually is a continuation of sold performance. In fact, over the past year Sembcorp Industries’ share price is up just over 70%.

Attached to Sembcorp Industries is scarcity value given that it’s the only pure-play renewable energy generator listed in Singapore. The next decade or so looks bright for this renewable energy company.

2. Yangzijiang Shipbuilding – 2022 year-to-date return = 38.7%

Next up is large Chinese shipbuilding company Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6).

While the company saw its shares trade rangebound over the past decade – given shipping oversupply – it’s now benefitting from a reversal.

The firm’s first-half 2022 earnings came in strong. Revenue of RMB 9.74 billion was up 70% year-on-year while its annualised return on equity (ROE) was 14% in the first half. That was up from 9% in the first half of 2021.

Yangzijiang managed to deliver 35 vessels in the first six months of this year, compared to 23 vessels delivered for the first half of 2021.

Its orderbook has grown substantially during the past 18 months or so. While it had an outstanding order book of 83 vessels as of the end of 2020, year-to-date Yangzijiang has a total outstanding orderbook of 134 vessels worth US$8.13 billion.

Most of these new orders have been containerships and bulk carriers. No doubt that has come on the back of supply chain snarls as large clients look to increase shipping supply.

Looking to Singapore for calmer waters

While both Sembcorp Industries and Yangzijiang Shipbuilding have been outstanding performers so far in 2022, this of course does not guarantee that they’ll continue to be.

It’s important to remember that investors need to monitor companies and their strategies to ensure that they align with your risk profile before investing.

However, with Singapore’s stock market providing us with solid and mature businesses, it’s good to know that both Sembcorp Industries and Yangzijiang Shipbuilding do also pay dividends.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Sembcorp Industries Limited.

About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer. In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.