Nevertheless, Ong Chu Poh, the nursing operator’s managing director was determined to go ahead with the listing. “I believe when there is a crisis, there is an opportunity,” he told The Edge Singapore in Issue 41 (Dec 9, 2002).
In 2012, with the help of a private equity firm, Econ Healthcare was delisted and expanded to Malaysia and China. Earlier this year however, the company announced it was seeking a relisting to raise funds to help speed up its expansion plans, albeit under a slightly different name: Econ Healthcare (Asia).
“Econ is already the market leader in Singapore and Malaysia. Although the population of aged people is growing in these markets, we still think of the company’s growth and whether there are other areas where our business can be meaningful,” said Ong in Issue 980 (April 19).
Not many companies under our coverage have come full circle like Econ Healthcare. More often than not, the overarching theme is change: Countries shake up their economies when they are not working well, entire industries go from boom to bust while big companies implode spectacularly and weak ones achieve turnarounds no one thought was possible.
Bulls and bears, crises and opportunities
You are now reading the 1,000th issue of The Edge Singapore, where we have recapped in a thematic fashion some of the notable stories we have covered since Issue 1 (March 4, 2002) hit the newsstand.
By any measure, the past two decades have been eventful. They were marked by several events that triggered seismic changes and left deep impressions on us: A robust recovery from the 2002–2003 Sars outbreak and the Iraq War, followed by exuberance in the lead-up to the 2008– 2009 Global Financial Crisis. There was a genuine fear that what started as a crisis in the US that took down big Wall Street names would quickly spread to other countries and lead to a breakdown in the global financial system.
But thanks to “quantitative easing” — which basically means the US Federal Reserve went on a money-printing spree — markets bounced back quickly.
The ensuing asset inflation helped drive up prices and markets, setting the stage for the longest bull run in history. But just when everyone was beginning to wonder when the party would end, the Covid-19 pandemic struck, triggering a big sell-off in March 2020.
In a rare show of global unity, governments and central banks again prime-pumped their economies to make sure liquidity and credit were readily available. Global financial markets recovered sharply, clearing the way for US stock markets to hit one new high after another.
Just like how economies and stock markets have their ups and downs, our coverage of the corporate sector has gone through plenty of about turns like a roller-coaster ride. We put some companies on the cover, laud about the wisdom of their CEOs and gush about how promising their businesses were — only to eat our words when some of them crash and burn.
Case in point: Former market darling Hyflux, whose founder and CEO Olivia Lum was the cover girl for The Edge Singapore numerous times after winning ever-larger contracts for water treatment projects. Unfortunately, its Tuaspring desalination plant never made a profit and the company collapsed under the weight of its liabilities and has since been wound up.
Noble Group, the Hong Kong-based, Singapore-listed commodities trading giant, once rode high on the commodities boom when demand for coal, iron and other resources was red hot. When the market turned, there were persistent allegations that the value of its assets had been inflated while its liabilities were under-reported. When its share price could not withstand relentless attacks from short-sellers, the company sank into court-appointed restructuring.
Midas Holdings was another memorable story. It was one of the supposedly better-run S-chips, winning a string of corporate transparency awards and garnering positive comments from its following of analysts.
Up till today, it remains unclear if winning these awards had gone to the head of its former chairman Chen Wei Ping who had no second thoughts about taking out unauthorised loans and getting its local subsidiaries to act as guarantors. The scandal broke only after courts in China froze their assets.
“The joint investigations into Midas Holdings and Noble Group are at an advanced stage,” according to a joint response by Accounting and Corporate Regulatory Authority (Acra), the Commercial Affairs Department and the Monetary Authority of Singapore.
“Singapore authorities have been working closely together to coordinate investigations into the different aspects of each case. We will take firm action against wrongdoers where breaches of law have taken place,” the three agencies note.
Specifically, for Noble, investigations into potential breaches of the Securities and Futures Act and the Companies Act have involved the review of voluminous data and records, interviews with relevant individuals, engagement of relevant experts and seeking assistance from overseas counterparts where needed.
In addition, Acra is concurrently inspecting the audits of Noble International Resources —a subsidiary of Noble Group — to assess compliance with Singapore standards on auditing, according to the joint response.
Winners and losers, we’ve seen them all
Nevertheless, it hasn’t been all bad news in our coverage of the local corporate scene. We take joy in reporting relatively unknown companies that had performed well. One of them was AEM Holdings which back in 2014 was still a penny stock. Loke Wai San, who took control from the previous management, cut loose operating units with bleak prospects to focus on serving its key customer better.
Over the years, AEM grew with this customer and in February, it hit a recent peak of $4.62. On Aug 31, Temasek Holdings completed a placement to become its largest shareholder. That same day, AEM announced it had signed another big customer.
Over the years, the three big banks — DBS Group Holdings, Oversea-Chinese Banking Corp and United Overseas Bank — have seen rough days, being the bellwether for Singapore and, increasingly, the region’s economic health.
Even so, our coverage of the banks shows they have maintained a stellar track record of delivering steadfast returns to shareholders over the long run.
Property group CapitaLand, no stranger to M&A and restructuring, also showed competitors and peers how to run a property business without actually owning too many properties.
Hospitality, aviation and manufacturing are the major industry sectors we’ve written about, all of which had their fair share of wins, missteps, M&A deals, personalities, ambitions, challenges and opportunities.
Interestingly, despite all the big changes taking place in the wider business environment, there are certain companies that have stay focused in their niches and gotten better with time. Take for example Medtecs International Corp, which was one of the hottest stocks of 2020 because it was in the business of making and selling protective gear for medical workers.
However, CEO Clement Yang wants investors to look beyond the current health crisis and recognise the company for its longer-term growth potential. This was what he had said in a 2003 interview when the region was still grappling with Sars and demand for his products surged.
As it turned out, Medtecs’ stock then fell off investors’ radar until 2020 when it shot up by as much as 4,500%, in tandem with the 11,234.9% jump in its earnings for the year. In an interview with The Edge Singapore in April, William Yang, who took over from his father Clement as CEO, described new strategies to keep the growth going. These included putting a bigger focus on building Medtecs’ own brand and selling directly to consumers instead of staying as a contract manufacturer.
The renewed interest in Medtecs, of course, was triggered by the Covid-19 pandemic. For nearly two years now, our coverage — as is the case with most other financial publications — has been dominated by how markets are reacting to the pandemic.
From the initial murmurings of a “Wuhan virus” circulating in China in January 2020, Covid-19 became a full-blown global pandemic within weeks. In our cover story of Issue 919 (Feb 10, 2020), the number of people infected worldwide was 28,000, with 50 fatalities. By the end of August, there would be around 217 million cases worldwide and 4.5 million deaths.
Market players were initially unfazed, with the more optimistic ones predicting the virus will die off in the summer months. Unfortunately, that didn’t happen and investors headed for the exit in March 2020.
Practically all sectors were hit, no matter how little they were affected by the pandemic. The REITs, supposedly a safe-haven investment, plunged after private banks rolled back financing extended to their clients.
Banks, even with ample liquidity and reserves, were told to cut dividends in anticipation of mounting bad debts. Property counters, most of them already trading below book values, dropped even further as working from home became the norm and once-bustling malls and offices became deserted overnight.
Airlines and hotels suffered the most. Singapore Airlines dived to as low as $3.39 last October as its entire fleet was grounded. The free fall was only arrested after its largest shareholder Temasek Holdings, committed to an unprecedented rescue package of $15 billion to keep the flag carrier flying.
Separately, Deputy Prime Minister Heng Swee Keat drew into the reserves to help fund packages totalling $100 billion to cushion and support Singapore’s economy, which suffered its steepest quarterly contraction ever with a drop of 42.9%.
Stock market revival without the recovery
For months, market commentators have tried to make sense of how bad things will become. Some, drawing references from the Spanish Flu exactly a century ago, warned that it would be a couple of years before the pandemic will be over while most put up a brave front and urged investors to stay vested by dishing out worn-out clichés like “it is not time to market, but time in market”.
Even as economists were debating the shape of the recovery: L, V or a Nike swoosh, a peculiar investing behaviour was observed: market trading volume climbed steadily. Retail investors, in particular, were swooping back into the market.
In May 2020, we reported that local brokerages were not just seeing inactive clients reactivating their dormant accounts, throngs of new accounts were opened by first-time investors too.
The reason was that these new investors, sidelined by the long preceding bull market, were jumping in to take advantage of what they thought was a market correction.
In this “Covid rally”, tech stocks were especially hot, hitting new highs day in, day out. A previous generation might have been burnt by the bursting of the dotcom bubble in 2000 but a new generation had no such memories or must have convinced itself that “this time it is different”.
Having grown up familiar with the use of Netflix, Facebook, Microsoft, Google and the likes, investors loaded up these very same names that continued to function normally in the pandemic. Device makers such as HP Inc and Lenovo enjoyed robust sales, and suppliers, specifically those in the semiconductor ecosystem, experienced such high demand that shortage of parts became prevalent.
Meanwhile, right after Joe Biden won the hotly-contested 2020 US elections, Pfizer announced that its vaccine that was developed jointly with BioNTech has 95% efficacy. That sparked off a big rally as investors cheered that the pandemic will soon end. Airline stocks, battered badly, rebounded while stocks of building material providers jumped in anticipation of the resumption of infrastructure and construction works, as did other industrial and cyclical plays.
However, as we head into the last quarter of the year, the mood has mellowed significantly as new variants of the virus emerge, infecting even those already vaccinated. Global supply chains remained in a state of misalignment and economists are beginning to add more caveats to their forecasts.
The pandemic will be over eventually but new crises will break out, together with new opportunities to ride the bull. Some of the big corporations of today will fade into obscurity while the champions of tomorrow in newly-created industries will emerge from Covid’s ashes.
These are but some of the stories that The Edge Singapore have brought to you, our invaluable readers, in 1,000 issues. With your support, we hope to do this for as long as it is possible.
The Edge Singapore editorial team
Vicom delivered the best returns; Incredible Holdings the worst
Given how The Edge Singapore covers the markets closely, we are curious which are the best and worst-performing stocks since we’ve started business to date.
According to Bloomberg data, the best-performing stock from March 2002 to the end of August this year was not a fancy, hard-charging tech stock. Rather, it is the low-profile Vicom, a separately listed subsidiary of ComfortDelGro which focuses on the decidedly dry and mundane business of conducting mandatory vehicle inspections.
The company does not generate that many headlines or market itself actively to the investment community. Between March 2002 and August, Vicom generated total returns of 4,004%, equivalent to a CAGR of 20.9%. Vicom was listed back in 1995 and over the years, built up a track record of stable, slightly growing earnings but once its generous dividend payout is factored in, is a clear indication how time in the market can beat timing the market.
Raffles Medical Group, founded by Dr Loo Choon Yong more than four decades ago, had a rough patch over the last few years as it was bogged down by significant costs committed to expanding its China business.
However, it reported an earnings jump of 128.7% to $39.5 million for its most recent 1HFY2021 ended June 30, thanks to its new-found business of providing Covid-19 testing and vaccination services. Yet, the events of recent years should not belie the fact that Raffles Medical returned a whopping 2,237% over our March 2002 to August period or a CAGR of 17.54%. Will the pandemic mark a new inflexion point for the company to post accelerated growth?
Singapore Exchange, a key player in the Singapore market ecosystem, has over the years endured plenty of brickbats, perceived or real. Some say it was being too harsh on stocks being driven up by animal spirits. Others say it did not do enough to protect retail shareholders when companies fall short on corporate governance.
In any case, SGX shareholders probably won’t complain much. Over the time period, SGX gave them total returns of 2,149% or a CAGR of 17.31%.
The fourth best performer is another traditional economy play: Property firm Ho Bee Land, which under chairman Chua Thian Poh grew into a multinational multi-asset property owner. Over our period, total returns for the company was 2,053% or a CAGR of 17.04%.
Only at the fifth place is a tech company of sorts: UMS Holdings, which serves the semiconductor industry, chalked up total returns of 1,604% and a CAGR of 15.7%.
Worst five
Just like how the top five performers made their shareholders smile, the worst five performers since March 2002 to August have had an opposite effect. Heading this end of the rankings is Incredible Holdings, which registered negative returns of 99.97%, according to Bloomberg. The company has undergone name changes and reiterations in its core business. As the former Vashion Group, it had distributed consumables used in manufacturing. Most recently, as Incredible Holdings, it is trying to expand its business into retailing of supposedly luxury items in Denmark.
The second to fifth worst companies are Arion Entertainment Singapore, which lost 99.95%; Advanced Systems Automation, which lost 99.86%; KTMG (99.81%) and Vallianz Holdings (99.47%).
So, how did the Straits Times Index do? In terms of price returns, it posted a 78.3% gain. But if dividends were reinvested, the gain over the same period would be considerably higher at 184.4% or a CAGR of 5.506%
