FOOD & BEVERAGES, FOOD PROCESSING + FOOD & DRUG RETAILING
Leading palm oil companies Golden Agri-Resources and Wilmar International figure prominently in the food & beverages + food & drug retailing sector. Golden Agri-Resources, led by chairman Franky Widjaja, describes itself as one of the world’s largest “seed to shelf” agribusinesses. The company was set up in 1996 and listed on the Singapore Exchange in 1999. It has operations across 14 countries. Its products are sold to around 100 countries worldwide, such as China, India and the US, as well as various destinations in Europe and the Middle East.
Golden-Agri Resources manages around 538,000ha of plantations, including farms of small owners, across Indonesia. In 2022, it produced around 2.43 million tonnes of crude palm oil (CPO). The company manufactures products for the global agronomy, food, oleochemical and bioenergy markets via its downstream refining and speciality product facilities. In addition, Golden Agri-Resources runs complementary businesses such as sugar and soybean-based products in China and sunflower-based products in India.
With an eye on sustainability, Golden Agri-Resources has achieved 98% traceability to the plantation in its palm supply chain at the end of 2022. The company has also set aside 79,900ha for conservation.
In this year’s Billion Dollar Club (BDC), besides coming up as the overall sector winner, the company is tops for returns to shareholders over the three years under consideration, with its share price increasing from 14 cents as at March 31, 2020 to 29 cents as at March 31, translating into a CAGR of 26.4%. Together with other sector-leading metrics, Golden Agri-Resources has also been named the overall sector winner.
Wilmar International, similar to Golden Agri-Resources, is another agri-business. The company was founded in 1991 and has, over the years, built up the entire value chain of the agricultural commodity business, from cultivation and milling of palm oil and sugarcane to processing, branding and distribution of a wide range of edible food products in consumer, medium and bulk packaging, animal feeds and industrial agri-products such as oleochemicals and biodiesel. The company runs over 500 manufacturing plants and an extensive distribution network covering China, India, Indonesia and some 50 other countries and regions.
Wilmar is the winner for the growth in the profit after tax (PAT) category. In the three years under consideration, earnings grew from US$1.3 billion in FY2019 ended Dec 31, 2019 to a record US$2.4 billion ($3.28 billion) in FY2022, representing a CAGR of 22.9%.
The company enjoyed higher prices for palm oil and sugar and better margins from processing, which helped to offset higher shipping costs. Shareholders were rewarded with a record cash dividend of 17 cents. Kuok Khoon Hong, chairman and CEO of Wilmar, describes FY2022 as an “exceptional” year. “Our team managed our operations well despite the volatility in the commodities markets and general economic slowdown during the past year,” says Kuok.
Leading supermarket chain Sheng Siong Group generated a weighted return on equity (ROE) of 33.6% in the three years under consideration for this year’s BDC. This showing not only makes it the best sector winner for this category, Sheng Siong also has the 5th best ROE among all BDC winners. From its humble beginnings of just one outlet, Sheng Siong has over the years built up a network of nearly 70 supermarkets in Singapore and is steadily expanding its presence in China, with six outlets and counting.
Unlike several other supermarket chains that make it a point to be anchor tenants in shopping malls, Sheng Siong is known to locate its outlets in the heartlands of Singapore. Besides the usual supermarket fare of packaged or preserved food, Sheng Siong has an extensive “fresh” food selection. It has also developed a selection of house brands to offer customers quality alternatives to branded products at substantial savings. To date, Sheng Siong offers over 1,600 products under its 23 house brands, ranging from food products to paper goods.