This is the Best-Performing Straits Times Index Stock in 2022

October 18, 2022

Singapore’s stock market has proven to be defensive in a year of decades-high inflation and rising interest rates from the US Federal Reserve (Fed).

The benchmark Straits Times Index (STI) in Singapore has comfortably outperformed the S&P 500 Index in the US, for reasons my colleague Billy has outlined previously.

The fact that many mature, dividend-paying companies that also call Singapore home has helped. I’ve previously written about two of the top-performing STI stocks so far in 2022.

However, one of the component stocks of the Straits Times Index has beaten both of those. In addition, it’s recorded price gains of an incredible 52% so far in 2022.

Here’s what Singapore investors need to know about this STI stock that has delivered strong returns for shareholders year-to-date.

Jardine Cycle & Carriage – Southeast Asia growth

Constituent stock Jardine Cycle & Carriage Ltd (SGX: C07), also known as “JC&C”, is probably one of the less well-known STI stocks.

It’s also the best-performing constituent stock of the STI so far in 2022, with its shares up a whopping 51.9% so far in 2022.

That’s because, as its name implies, it operates mainly in the auto and vehicle industry within Southeast Asia.

The company has a majority holding in Indonesia-based, diversified conglomerate Astra International and various holdings in a range of auto firms across Southeast Asia.

So far in 2022, JC&C has benefitted from Astra’s remarkable rebound in its business in the first half of the year.

Astra, which contributed nearly 90% of JC&C’s underlying profit in H1 2022, saw its net income contribution to the group grow by 58% year-on-year during the period.

A lot of this growth came from the heavy equipment and mining division of Astra (see below), as a rise in commodity prices. Indonesia’s position as a net commodity and energy exporter clearly benefitted the group.

Astra JC&C underlying profit H1 2022Source: Jardine Cycle & Carriage H1 2022 earnings presentation

Dividend play

JC&C management also announced that it would pay a larger part of its full-year dividend in its H1 2022 interim dividend.

That meant that the company increased its dividend for H1 2022 by 56% year-on-year to 28 US cents, up from the 18 US cents in the year-ago period.

Meanwhile, this dividend is well-covered from its underlying earnings per share (EPS) of US$1.32 for the first half of this year, up 51% year-on-year from H1 2021.

As a result, based on its 12-month trailing dividend per share (DPS), JC&C shares currently over investors a reasonably attractive dividend yield of 4.1%.

Positive outlook on regional resilience

While JC&C had an extraordinary first half of 2022 – posting a record-high half-year underlying profit – management still expects the group’s earnings in the second half of the year “to remain strong”.

Its stake in THACO, a multi-industry Vietnamese conglomerate, also helped earnings in the first half of 2022.

It’s well-known that Vietnam is one of the most promising Southeast Asian economies in terms of its growth.

With continued exposure to high-growth markets in Southeast Asia, like Indonesia and the Philippines, it’s easy to see how JC&C shares could continue to outperform in the second half of 2022.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.

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.

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