At the risk of sounding obvious, 2020 has not been a normal year. That is why we are organising the annual Billion Dollar Club differently although we wish we could have a physical event so that we can meet our winners in person, congratulate them, greet old friends and make new ones.
Nonetheless, the show must go on and it is not just The Edge Singapore that is going ahead with its activities. Virus or not, Singapore Inc has also shown its eagerness to get back to doing business.
There was the initial wait-and-see attitude when the virus hit, but quite quickly, everyone was itching to get back into the thick of things. The best way for companies to counter the economic disruption of Covid-19 is to continue doing what they know best: Identify market opportunities, formulate and execute strategies, and deliver value to all their stakeholders.
The severity of the downturn should not be underestimated though. Many companies have been badly hit while others have closed for good. On the other hand, there are the relatively resilient ones and those which are positioned well to capture new trends once the pandemic tide turns.
Take for example this year’s overall runner-up for the Billion Dollar Club, glove maker Riverstone Holdings. In the first few years it was listed, it did not attract a big following from the investment community. However, when the pandemic broke, demand for rubber gloves shot up and the company found itself ready to ship out its supply to customers. Similarly, two other glove makers Top Glove Corp and UG Healthcare Corp too have been recognised this year for their outperformance.
Just to be clear, Billion Dollar Club winners are chosen via a quantitative-based methodology which we have consistently applied (see www.theedgesingapore.com/BDC2020/ methodology). It is not dependent on a single outstanding year, but consistent performance across the past three years. In short, consistent, measurable improvement is key to Billion Dollar Club honours.
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Venture Corp, which returned as the overall top performer following last year’s win, is an example of a Singapore company that has consistently delivered greater value to its stakeholders over the years, such that it is better described as a “technology partner” to its clients instead of being a “contract manufacturer”.
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Growth drivers
See also: About the Billion Dollar Club & Honours List
While we recognise and honour the big caps, the fact is investors should pay closer attention to smaller companies. Big companies, by nature, will find it harder to generate industry-beating growth year after year. This is not to belittle the importance of the large caps as they are the bellwethers in any economy — or any investor’s portfolio.
Rather, what we would like to point out is that the incremental growth of a economy has to come from the smaller companies — such as those that we recognise in the Centurion Club, which ranks those with market values between $100 million and $1 billion. The top Centurion Club winners are determined using a largely similar methodology used for the Billion Dollar Club, but they have growth rates that outpace the top Billion Dollar Club performers considerably.
Take for example AEM Holdings, overall winner of this year’s Centurion Club. Eight years ago, the company was on the SGX Watchlist. After executive chairman Loke Wai San took control of the company in 2011, he spent the next few years reorganising things, getting the right people aboard, identifying the right market segment and then moving boldly forward to stake a big claim on it by delivering ever more value to key customers.
When Covid-19 hit, the wider market was engulfed in a period of volatility. While other companies report depressing numbers, AEM revised its revenue guidance several times upwards. Needless to say, its share price has staged a remarkable outperformance this past year. For the three-year period used in the evaluation, AEM generated shareholders’ return at a CAGR of 80.4%. The company’s market value is already hovering at just around the billion-dollar mark, and this time next year, AEM might just be in the same league as the Billion Dollar Club big boys.
The same goes for iFAST Corp, another Centurion Club winner. Famous for its early years as the Fundsupermart online distributor of unit trusts at the cusp of the dotcom era, the company has over the years built up a comprehensive suite of wealth management solutions. From just Singapore, chairman and CEO Lim Chung Chun has led the company into Hong Kong, Malaysia, India and China as well. Similarly, through earnings growth and an astute use of technology to gain scale, iFAST’s market value is already hovering around the billion-dollar mark. And if all goes well, iFAST too can be expected to challenge in the Billion Dollar Club next year.
Naturally, there are some winners that have been hit by the pandemic. Take for example BRC Asia. Prior to the pandemic, its management under CEO Seah Kiin Peng was busy integrating the company with Lee Metal Group, which it had acquired in 2018. When Singapore’s shared workers’ dormitories went into lockdown in April, BRC Asia imposed a similar set of safe management rules on its own dorms to curb the spread of the virus within the wider foreign workers’ population and to the local community at large. Of course, such a measure disrupted its operations. However, BRC Asia made use of the downtime to focus on improving its processes and products to get ready for the eventual recovery.
Win for the ecosystem
The Edge Singapore has come across many such success stories on a regular basis. Since we started in 2002, we have maintained insightful and consistent coverage on the key developments of the Singapore corporate sector — and what an eventful journey it has been.
On the other hand, there were stomach-churning episodes like the Global Financial Crisis when major Wall Street names went under, causing collateral damage to our part of the world. Or, when the price of oil collapsed, bringing down with it Singapore’s once-bustling offshore and marine industry.
When certain former high-flying companies failed spectacularly due to malfeasance or bad governance, we felt the pain along with its shareholders. We also heaved a collective sigh of disappointment as yet another privatisation offer for an undervalued company come along or as more local investors abandon local stocks for those on the Hang Seng and Nasdaq instead.
Nevertheless, there have been many moments of excitement and satisfaction during our hunt for stories — like when companies reported turnarounds or when their diversification plans finally bore fruit. Or when big M&As between local companies were announced.
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To be sure, the Singapore stock market has enjoyed an uplift recently. Besides a spike in trading interest from both institutional and retail investors and bouncing back strongly from the end-March lows, there have been significant wins on the IPO front, something which has not happened often enough lately. For instance, the Oct 23 IPO launch of the first home-grown tech “unicorn” Nanofilm Technologies International was warmly received. This was promptly followed by the Mainboard IPO of Credit Bureau Asia on Nov 26 which saw the offer more than 60 times subscribed. As this issue of The Edge Singapore goes to print, yet another Mainboard listing, entertainment company GHY Culture and Media (see Page 37), is ready to make its debut too, further adding to the diversity to the market.
With the slew of Mainboard listings, our friends at Singapore Exchange, who are lending support to the Billion Dollar Club yet again, can mark the end of 2020 with satisfaction, knowing that their efforts to make our market more attractive is starting to pay off. We would also like to thank sponsor Mitsubishi Electric Asia and knowledge partner EY.
By organising the Billion Dollar Club and the Centurion Club, we applaud the winners for the success they have achieved. But the bigger aim is to show the wider investor community that the Singapore market, encrusted with shiny gems like these, is certainly worth their attention and active participation.
Our big congratulations to all the winners and our ecosystem.
