What is STI ETF ?

STI ETF is short for Straits Times Index Exchange Traded Fund and it is managed by State Street Global Advisors (SSgA). It has been listed on SGX since 17 April 2002. The benchmark for STI ETF is Singapore’s Straits Times Index (STI). The Fund’s investment objective is to replicate as closely as possible, before expenses, the performance of the STI.  

The price of each share for STI ETF is approximately 1/1000^th of the STI.  If the STI is at 1700 points, then STI ETF will be 1700/1000 = S$1.70.  Usually the price of STI ETF will not match STI exactly since the portfolio does not match STI component stocks 100% but it is close enough to mirror STI overall performance.

STI ETF can be traded like a stock.on the Singapore Stock Exchange and it also pays out dividend, usually twice a year. The following are some of the recent corporate actions related to dividend and stock split for STI ETF (source : SGX):

DIVIDEND 22 Jan 2009 28 Jan 2009 6 Feb 2009 SGD 0.04 ONE-TIER TAX 

DIVIDEND 22 Jan 2009 28 Jan 2009 6 Feb 2009 SGD 0.01 TAX EXEMPT 

DIVIDEND 22 Jul 2008 24 Jul 2008 4 Aug 2008 SGD 0.0176 NET OF TAX 

DIVIDEND 22 Jul 2008 24 Jul 2008 4 Aug 2008 SGD 0.0424 ONE-TIER TAX 

DIVIDEND 24 Jan 2008 28 Jan 2008 6 Feb 2008 SGD 0.0547 ONE-TIER TAX 

DIVIDEND 24 Jan 2008 28 Jan 2008 6 Feb 2008 SGD 0.0053 NET OF TAX 

ENTITL. 10 Jan 2008 14 Jan 2008  STOCK SPLIT OFFER OF 10 FOR 1 

DIVIDEND 20 Jul 2007 24 Jul 2007 2 Aug 2007 SGD 0.2 NET OF TAX 

DIVIDEND 20 Jul 2007 24 Jul 2007 2 Aug 2007 SGD 0.25 TAX EXEMPT 

DIVIDEND 20 Jul 2007 24 Jul 2007 2 Aug 2007 SGD 0.05 

DIVIDEND 18 Jan 2007 22 Jan 2007 1 Feb 2007 SGD 0.28 

DIVIDEND 18 Jan 2007 22 Jan 2007 1 Feb 2007 SGD 0.22 NET OF TAX 

For 1H09, STI ETF will pay out 5 cents dividend, which works out to be about 5.78% dividend yield assuming the stock price is about S$1.73 and it also pays 5 cents in 2H09.  In 2008, STI ETF paid 12 cents dividend for the full year.

The following are component stocks of STI ETF in January 2009 (source : www.streettracks.com.sg)

Kepcorp, Jard C&C, City, Capland, Capmall, SIA, Starhub, DBS, Golden Agri, Wilmar, Cosco, F&N, Genting, HKLand, JMH US$, JSH US$, Keplan, NOL, Noble, Olam, OCBC, SembMarine, SIE, ST Engg, SGx, SPH, UOB, Sembcorp, YLLG

The following is the fund profile for STI ETF as at 23 January 2009 :

NAV per share : S$1.70

Source : http://www.streettracks.com.sg/ssga/jsp/en/FundInvestment.jsp

Stock Market News :

Morgan Stanley (MS) revised down China GDP forecast from 7.5% to 5.5% in 2009 :

MS says Chinese economy was hit hard in 4Q08 by massive de-stocking and a serious disruption in trade finance. The economy landed hard in the quarter, with industrial production and CPI inflation likely having plunged to 6%YoY and 2%YoY from 16%YoY and 8%YoY, respectively, in 2Q08. We estimate China’sGDP growth may have registered negative QoQ growth of -1.7% in 4Q08 after a flat quarter in 3Q08 (on a seasonally adjusted, annualized basis). MS is downgrading GDP growth forecast for China from 7.5% to 5.5% for 2009.

Singapore stock market news :

Tat Hong issues profit warning, DBS downgrades call, CIMB and CSFB maintains Outperform calls :

DBS downgrades to fully-valued with target price S$0.62 :

Tat Hong alerts investors that its 3QFY09 earnings would be lower yoy, blames on forex losses and lower equipment sales. We have already imputed the weak earnings in our FY09-10 forecast, which are 16%-32% below consensus. Our TP is revised down to S$0.62, based on lower multiple of 0.8x P/NTA. This implies a 10% downside from current share   price. The stock has appreciated 20% since our upgrade in November. We advise investors to take profit now. Downgrade to FULLY VALUED.

CIMB maintains Outperform with lower target price of $0.90 :

To account for the adverse currency impact as well as slower demand,

we have cut our forecasts by 14-22% for FY09-11, mainly for its trading business,

which includes spare parts. We also reduce our forecasts for its rental segment by about 7%, to be conservative. Despite the above, we believe TAT’s longer-term fundamentals remain good, as management has been proactive in increasing its business resilience by developing its rental business, while taking measures to reduce trading inventory during this downturn. Management and the Ng family have also been purchasing TAT shares in past months, underscoring their confidence in the business. We maintain Outperform, albeit with a reduced target price of S$0.90 (previously S$0.93) following our earnings reductions. Our target is still based on 0.8x CY09 P/BV.

CSFB maintains Outperfom with target price S$0.95 :

These events were anticipated, and have in aggregate, driven our recent earnings downgrade. We have factored in a weaker 2H09, both on a HoH and YoY basis, as we expect equipment sales, contributing an estimated 30% of total revenue in 2H09, and 24% of total profit, would fall 54% YoY and 57% HoH. This suggests that downside risks to our FY09E forecasts, as well as that of consensus, are limited. We therefore believe that management has been conservative in issuing the profit guidance announcement, and also note the fervent insider buying activities since Aug. 2008. Near term, however, we believe that Tat Hong’s shares could see weakness from profit-taking, given the strong 73% rally since Oct. 2008. We continue to view Tat Hong as well-leveraged into construction sector demand across Asia, which is expected to remain strong over the medium term, given its operational scale, a clear growth strategy, and strong balance sheet. Tat Hong currently trades on 0.8x P/B, at a-fifth of its historical high of S$3.42 in Nov. 2007, about 35% to its historical lows (of 0.5x P/B), and with a 10.5% dividend yield support.

rooney