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Home News Billion Dollar Club 2019

Corporate leadership in a time of 'conscious capitalism'

The Edge Singapore
The Edge Singapore • 6 min read
Corporate leadership in a time of 'conscious capitalism'
The Edge Singapore’s Billion Dollar Club recognises leading performers among the largest local listed companies.
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The Edge Singapore’s Billion Dollar Club recognises leading performers among the largest local listed companies.

(Aug 26): Times have certainly changed, when top global CEOs declare that companies have a broader responsibility to society, instead of only its stockholders. In light of the consensus towards “conscious capitalism’ reached at the recent Business Roundtable, a gathering of corporate America’s most influential leaders, The Edge Singapore’s Billion Dollar Club returns for its fourth year, with an extra edge.

When this paper first started, in 2002, our mission was clear: We researched and wrote about financial markets, and listed companies in particular, focusing on their financial performance and the returns they gave shareholders.

It has become increasingly evident that simply taking a company’s financial reporting and performance at face value does not necessarily give its shareholders the full picture of how well the company is doing, nor how it will continue to fare. As such, in order to help our readers navigate this evolving business and investment landscape, we have adjusted our editorial direction, to focus on three key pillars: Governance, sustainability, and investor education.

We believe that a company’s governance standards, and how it approaches the broader environment and society in which it operates, impacts its business in the longer term, in essence, its sustainability. And this should, in turn, have a bearing on how attractive the company is to investors today.

As such, as an extension of The Edge Singapore’s coverage of the corporate sector, this year’s Billion Dollar Club awards take into account ESG indicators, in addition to the traditional metrics of profits, return on equity, and share price performance.

The largest companies that feature in this endeavour have performed admirably on all fronts. Many are familiar, blue-chip names that make up a major part of Singapore’s economy, and indeed regionally as well. They include southeast Asia’s largest telecommunications company Singapore Telecommunications; the region’s largest bank, DBS Group Holdings; the region’s largest property developer CapitaLand. Other companies such as the two other local banks, Oversea-Chinese Banking Corporation, and United Overseas Bank, are regional giants in their own right as well. Several others, such as Venture Corp, are market leaders in their respective fields as well.

Membership to the BDC is not by invitation, but by eligibility. To qualify, a company must have a minimum market capitalisation of $1 billion. We’ve grouped the contenders into nine different industry sectors, as used by the Singapore Exchange. Within each of these nine sectors, we look at the three different metrics: return for shareholders in the last three years; profit after tax growth for the last three years; and return on equity for the last three years. Scores are then assigned according to these three metrics, and the company with the best overall score of all three metrics will be named the overall sector winner.

A weighted combination of these metrics provides each company with an overall score within their respective sectors. Companies with high scores on one metric did not necessarily have high scores for the other metrics. And, companies with the highest overall scores are not necessarily the most favoured by investors.

This was the methodology we used for the previous three years’ awards. For 2019, we have applied an additional criteria. We have tapped on ESG scores provided by the Singapore Exchange and Sustainalytics, recognising companies that have done well in environmental, social and governance factors. The overall sector winners for the 2019 BDC will be well-rounded corporations.

Ultimately, the point of doing this exercise is to turn the spotlight on how Singapore’s largest locally-listed companies have performed, using relatively simple and transparent financial metrics. We trust this will be a useful guide to help investors make better-informed decisions.

2018 winners

For the transport / storage / communications sector, Singapore Telecommunications, for years Singapore’s largest company by market value, was the sector winner. The telecommunications giant, in the year under review, led its industry peers across the various metrics.

For the services sector, software company Silverlake Axis and airport ground handling service provider SATS were joint winners. These two winners embody the strength and market advantage by being specialists in what they do: the former, focuses on helping banks across the region embark on their digitalization efforts; the latter, help airlines flying in and out of Changi Airport serve their passengers more efficiently.

Among the growing and increasingly vibrant REITS sector here in Singapore, Lippo Malls Indonesia Retail Trust, part of the Riady family-controlled list of entities, came out tops. For the property development sector, Yanlord Land Group, which is listed here, based here in Singapore, but focuses on projects in mainland China, was the winner.

Singapore Technologies Engineering, meanwhile, was named sector winner for the multi-industry sector. The company has built up capabilities for both its defence engineering and commercial engineering businesses. It is gearing up to capture new growth areas in electronics and security systems integration.

Blue-chip electronics manufacturing services provider, Venture Corp, was named winner in the manufacturing sector. Venture, ably led by chairman and CEO Wong Ngit Liong, is a regular winner at the BDC.

DBS Group Holdings, which has been neck-to-neck with Singtel as the company with the largest market value company here, topped the finance sector. The bank has been actively tapping newer ways to deliver banking services. It has taken to calling itself “Digital” Bank of Singapore — a pun on the “Development Bank of Singapore” that was its genesis decades ago.

Within the commerce sector, Best World International was named sector winner, as the company enjoyed turbocharged growth in new markets such as China.

AusNet Services, which runs power transmission networks in Australia, was named sector winner for the combined Agriculture/ Hotels/ Restaurants/Electricity/ Gas/ Water sector.

2019 winners

On Sept 6, we will be unveiling the 2019 winners of the Billion Dollar Club.

To be sure, the business environment is never static. A company’s ranking in one year is no guarantee of future performance. For example, since July 2018, however, AusNet Services has delisted from the SGX. And shares in Best World International, under a cloud after a short-seller report and with an independent audit underway, has been suspended since May 2019.

Corporate history is littered with examples of how companies, bereft of fresh ideas and bad management, fell by the wayside. On the other hand, those with new ideas that are well-executed, coupled with the drive to grow, and an eye on sustainability, are set to enjoy longer term returns. And investors are likely to be along for the ride.

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