BILLION DOLLAR CLUB:

INDUSTRIAL CONGLOMERATES + INDUSTRIAL GOODS + CONSUMER GOODS CONGLOMERATES

Singapore Technologies Engineering (ST Engineering) is one of the companies that made a clean sweep of all industry category awards up for grabs in the Billion Dollar Club. The company is one of the core members on the long list of government-owned companies that take up strategic positions across various economic sectors.

Over the three years under consideration, the company recorded a CAGR of shareholder returns of 3.3%, earnings growth of 4.9% and weighted ROE of 24.23%.

ST Engineering, which started decades ago producing bullets for the Singapore Armed Forces, has over the years expanded into various critical sectors ranging from aircraft maintenance to shipbuilding and electronics.

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In FY2021, the company recorded a revenue of $7.7 billion, up 7.5% over FY2020, with contributions from across its various major segments. Earnings were up 9% y-o-y to $570.5 million, thanks to some one-off effect from government grants.

In 2021, while businesses were dealing with challenges brought about by the pandemic, ST Engineering, better known for steady organic growth, made its largest-ever deal with the US$2.7 billion acquisition of US-based transport management firm TransCore. According to ST Engineering, the deal, which was completed earlier this year, will help speed up its ambition to grow in the smart city and smart mobility markets.

“We will continue to search for growth opportunities and are constantly on the lookout to acquire good companies that are a strategic fit at a reasonable price. We are cognisant that M&As need to be strategic, synergistic and value-accretive,” said chairman Kwa Chong Seng and CEO Vincent Chong in the company’s FY2021 annual report.

With effect from the current FY2022, the company has put in place a new dividend policy. Instead of two half-yearly payouts for a total of 15 cents as it had for FY2021, ST Engineering says “recognising that returning value to shareholders is an important management objective”, it will now pay out 4 cents per quarter for a total of 16 cents for FY2022.

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In a sign of strong business momentum, ST Engineering won new contracts worth some $11.7 billion in FY2021, bringing its total order book to $19.3 billion. “We expect the delivery of our strong order book, our various business initiatives and further business recovery to position us well for 2022 business performance,” the company notes.

 

CENTURION CLUB: INDUSTRIAL AND COMMERCIAL SERVICES + INDUSTRIAL GOODS

Frencken tops sector for overall strong showing; Boustead, Grand Venture Tech and Micro-Mechanics share other wins

Frencken has made it a point to diversify its earnings base and build up multiple earnings streams from customers across different industries / Photo: Frencken

Manufacturer Grand Venture Technology, with the backing of three full years of earnings track record, has won a Centurion Club industry award for the first time. The company was listed in January 2019 and from the initial Catalist listing, it has upgraded to the mainboard as its business grew. Grand Venture topped the return to shareholders category, with a 59% CAGR over three years.

The company, after listing, has raised funds by issuing new shares to strategic investors. It has also sped up its growth trajectory by acquiring other companies with shares. In FY2021 ended December 2021, the company reported earnings of $17.6 million, up 236.6% y-o-y. Revenue was up 89.2% y-o-y to $116.3 million with “robust” demand across all business segments.

Boustead Singapore is one of the rare companies founded here with nearly two centuries of operating history and half a century of listing history that few can match. Led by chairman and group CEO Wong Fong Fui, the engineering and real estate firm was named the winner for growth in PAT in the industry sector, with a 64.5% CAGR over the three years. The company’s earnings in recent years were boosted by a one-off gain of the Boustead Industrial Fund, which is part of the company’s multi-year plan to improve returns.

According to Boustead Singapore, one recent bright spot is its geospatial division which has delivered steady performance continuously as demand for geospatial and smart mapping capabilities grows. In his chairman’s message, Wong maintains that the sustained profitability of the company “did not happen simply by chance” but by its diversified business model, the structure of the company, underpinned by a strong balance sheet.

Micro-Mechanics (Holdings), meanwhile, was named the winner for best weighted ROE, scoring 27.5% over the three years. The company, which makes precision parts, enjoyed steady business growth in recent years from the upswing in the semiconductor cycle. Featuring a resilient business, Micro-Mechanics has proven to be a shareholder-friendly company with a consistent dividend payout that not all tech-heavy companies are.

The overall sector winner this year is none of these three category winners though. Instead, it has been awarded to manufacturer Frencken Group, given its overall showing. The company has enjoyed very good business from its clients in the semiconductor industry. Instead of focusing solely on this sector, Frencken has made it a point to diversify its earnings base and build up multiple earnings streams from customers across different industries.

“Our focused strategy of serving leading corporations in multiple industries, a wide range of end-user markets and different geographical regions ensures there is a high level of diversity in our business,” says chairman Gooi Soon Chai in the company’s FY2021 annual report. “This benefits the group by providing greater stability and resilience. In FY2021, we continued to make progress to further strengthen our business model by executing both organic and inorganic initiatives,” he adds.