Singapore’s stock market benchmark, the Straits Times Index (STI), is made up of 30 companies.
They include businesses that many Singaporeans are likely to be familiar with, such as Singapore’s flag carrier, the three local banks, DBS (SGX: D05), OCBC (SGX: O39) and UOB (SGX: U11), Singapore Airlines (SGX: C6L), SingTel (SGX: Z74), property company CapitaLand Investment (SGX: 9CI), engineering conglomerate Singapore Technologies Engineering (SGX: S63), and more.
While the 30 companies carry weight in Singapore’s stock market and have huge roles to play in our local economy, they are not indispensable. They can be booted out of the index and replaced by other companies if they don’t meet certain conditions.
Should any of the index constituents become ineligible to be still part of the STI, the next-in-line five stocks that are part of the STI reserve list can replace any of the STI components.
The reserve list consists of the five highest-ranking non-constituent STI stocks by market capitalisation.
As of December 2023, those companies are:
1. CapitaLand Ascott Trust (SGX: HMN)
2. Frasers Centrepoint Trust (SGX: J69U)
3. Golden Agri-Resources (SGX: E5H)
4. Keppel DC REIT (SGX: AJBU)
5. Suntec REIT (SGX: T82U)
#1 CapitaLand Ascott Trust
CapitaLand Ascott Trust, or CLAS in short, owns 106 properties in 45 cities across 16 countries, including Australia, China, Europe, Japan, U.S. and Singapore. It properties are mainly operated under the Ascott, Somerset, Quest and Citadines brands.
Source: Capitaland Ascott Trust investor presentation
In 2023, its gross profit from master leases rose 21% in the second half of 2023 due to higher variable rent and contributions from 2 new acquisitions. This was offset by a divestment of 4 properties in France. It managed to renew all its master leases that were due in 2023, and has only 8% of its master leases expiring in FY2024.
For its FY2023, it reported 20% higher revenue to $744.5 million. This strong set of results raised its distribution per unit (DPU) 16% to 6.57 Singapore cents. Based on its share price of $0.92, it has a distribution yield of over 7.1%.
Read Also: The Building Series: Building A REIT With Serena Teo, CEO, CapitaLand Ascott Trust
#2 Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust (SGX: J69U) is a leading pureplay Singapore retail REIT that owns malls such as NEX, Causeway Point, Changi City Point, and White Sands.
With an extensive retail footprint in Singapore, Frasers Centrepoint Trust benefits from the retail trends in heartlands, including the rise of omnichannel retailing and work-from-home arrangements.
The REIT’s properties are located near homes and transportation nodes, and they focus on diversified essential trade and services, giving it a leg up over its smaller peers.
For its financial year ended 30 September 2023, gross revenue at Frasers Centrepoint Trust increased by 3.6% year-on-year to S$369.7 million.
The growth was due to rising gross income, car park income and more of atrium events. However, the growth in gross revenue was partially offset by AEI initiatives at Tampines 1. With the overall revenue growth, Frasers Centrepoint Trust’s net property income rose 2.7% to S$265.6 million.
However, Distribution Per Unit (DPU) dipped up 0.6% to 12.15 Singapore cents. Based on Frasers Centrepoint Trust’s unit price of S$2.22, its distribution yield is 5.5%.
#3 Golden Agri-Resources (SGX: E5H)
Golden-Agri (SGX: E5H) is one of the world’s largest palm oil companies based in Indonesia.
The company is involved in the cultivation of oil palm trees, the processing of fresh fruit bunches into crude palm oil (CPO) and palm kernel, and refining CPO into value-added products such as cooking oil.
For its half year ended June 2023, Golden-Agri’s revenue hit US$4.9 billion, an 11% drop year-on-year. This was a result of lower palm oil prices and decreased fruit production due to weather and replanting. Net profit also dipped 46% to US$220 million.
The outlook for Golden-Agri looks to be steady with short-term supply with adverse weather conditions and geopolitical tensions, supply growth also remains limited with ageing plantations. Demand is also expected to increase on the back of biodiesel demand.
Golden-Agri shares are currently trading at S$0.28 apiece, giving it a dividend yield of 3.7%.
#4 Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is the first data centre REIT listed in Asia in 2014. It currently owns a property portfolio consisting 23 data centre properties in Singapore, Malaysia, China, Australia, Germany, UK, Italy, the Netherlands and Ireland.
For the 9 months of its financial year ending 30 September 2023, it reported 2.6% higher gross revenue to $211.1 million. This was achieved on the back of Contributions from acquisitions and positive income reversions.
Its distribution per unit, however, decreased 1.2% to 7.543 Singapore cents due to higher finance costs and less favourable forex hedges. This was partially offset by higher finance income and tax savings. Based on its unit price of $1.76, Keppel DC REIT offers a distribution yield of 4.9%.
#5 Suntec REIT (SGX: T82U)
With a current market capitalisation of S$3.4 billion, Suntec REIT (SGX: T82U) owns 10 properties in Singapore, Australia, and the United Kingdom (UK).
In Singapore, it owns Suntec City, 66.3% interest in Suntec Convention (convention and exhibition centre), a one-third interest in One Raffles Quay, and a one-third interest in Marina Bay Financial Centre properties.
Overall, Singapore and the office sector contributes to most of its income, as seen from the chart below:
Source: Suntec REIT investor presentation
For its latest financial year, ended 31 December 2023, its gross revenue increased 8.3% to $462.7 million. Its net property income dipped marginally to $313.2 million and its joint venture income dropped 21% to $94 million.
This was achieved by higher contribution from Suntec City Office, Suntec City Mall and Suntec Convention, as well as The Minster Building (London). However, higher maintenance fund contribution and commencement of sinking fund contribution in 2023, as well as lower contribution from the Australia portfolio impacted its portfolio.
Despite the strong financial performance, Suntec REIT’s distribution per unit (DPU) dropped nearly 20% to 7.135 Singapore cents. Based on Suntec REIT’s unit price of S$1.16, it has a distribution yield of 5.3%.
Source: Suntec REIT investor presentation
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