BEST SMALL CAP COMPANY
Ezion Holdings
When times are tough, companies are best served by gearing down, covering their bases and making preparations to spring into growth at the arrival of better days. And when the times are good, they’ve got to sell – hard.
That’s the mantra shipbuilder Ezion Holdings has adopted.
Ezion Holdings has seen cycle-up in 2012 after two years of volatile market conditions, and the company has gone to great lengths to maximise its growth. Namely, it’s strengthened its asset base more than threefold, entering 2012 with a fleet of six ships and exiting with 19.
The company began the year with SGD400 million (US$326.7 million) market capitalisation, and it was able to grow that figure to SGD1.2 billion by the end of November. Its stock price reflected this positive momentum. On January 3 its shares were bid at SGD0.68; by December 4 their value had more than doubled to SGD1.44.
“We’re about to call a ‘buy’ on Ezion because they’ve done a lot of things right this year, such as building up their asset base, ramping up their support services to the offshore oil and gas sector and they also developed their fleet of charters,” says one head of research at a Singaporean securities firm. “They managed their balance sheet and growth prospects very well, and are taking on a lot more contracts for ships. It has very good earnings visibility and strategic partners.”
Analysts attribute this success to the company’s risk management strategy amid the 2010-2011 downturn. Throughout these years, Ezion Holdings’ maintained US$47 million in net profit, staying afloat due to its manageable net debt-to-equity ratio of 32%.
Then, when the market picked up in 2012, Ezion Holdings ramped up, bringing its net debt-to-equity ratio to 93%. The increase works for the company at a time when interest rates are low and the demand for ships is high.
“This year you’re happy to gear up in the shipbuilding sector as long as you can manage your growth,” says the analyst. “Ezion has seen a quantum leap in its project growth and they’re still taking on more contracts. But they are transparent with investors about their plan. It’s sustainable.”
UOB predicts that Ezion’s 2013 year-end earnings will be US$120 million, nearly double the US$65 million it forecasts for 2012.
BEST MEDIUM CAP COMPANY
Super Group
Super Group has had a super year. The Singaporean food and beverage manufacturer, best known for its instant coffee, has strengthened its footprint in growth markets through innovative new channels to achieve elevated share prices throughout the year, boosting its market capitalisation to enable it to graduate from the small-cap space to the mid-cap.
“Super Group has been outstanding. In terms of its engagement with investors they have been heads above the rest in communicating and keeping investors up to date,” says an equity analyst at a Singaporean securities firm. “More importantly they have been executing very well the past two to three years in very difficult conditions when raw material costs have risen. They haven’t been resting on their laurels.”
Among the company’s achievements is mitigating the need for profit in a high-cost environment with customer satisfaction. For example, it decreased the number of instant coffee sachets in its family pack in an effort to minimise the cost impact on customers, rather than drastically raising prices. Data finds that consumers have not yet turned to down-market alternatives.
It has also bulked up in specific emerging markets. It continues to be a leader in Myanmar, and it has been ahead of the curve in Mongolia. Likewise in China and Taiwan, where consumers are still developing their coffee consumption, Super Group this year entered the non-dairy creamer business, giving it added breadth.
This has helped buoy share prices: as of December 4, Super Group’s shares were trading at SGD3.22, just under their 52-week high of SGD3.30 four days earlier. And in September, Super Group posted third quarter earnings of SGD22.6 million – 86% higher than a year ago.
The company has a market capitalisation of SGD1.23 billion, up from SGD730 million at the end of 2011.
BEST LARGE CAP COMPANY
Keppel Corp.
Singaporean marine-to-telecommunications conglomerate Keppel Corp. reaped the rewards of years of hard work in 2012, with its Offshore & Marine (O&M) unit in particular faring well.
The firm, which boasts a SGD20.48 billion market capitalisation across its O&M, Integrated Engineering, Energy and Telecommunications & Transportation businesses, stands out in particular for innovating in emerging Latin America, a space into which its shipbuilding rivals are just beginning to follow.
During 2012 Keppel O&M strengthened its relationship with Petrobras, South America's biggest oil company, which has sought Singaporean expertise as it invests US$127 billion in oil exploration and production. In August, Keppel won two contracts from a Petrobras-led consortium worth SGD950 million, positioning it well for a similar-sized follow-on option Petrobras may exercise by the first quarter of 2014.
“Everyone is excited about Brazil and Petrobras, but if you look at Keppel they’ve been there forever,” says one Singapore-based equities researcher. “Its competitor Sembcorp has also been highly regarded this year but even that firm is only now setting up in Brazil. Keppel has had a lot of foresight to be pioneers long ago, and now that the cycle has come up and it has a strong relationship with Petrobras it’s poised to further gain real depth of market expertise.”
The developments have helped Keppel’s share prices grow approximately 12% year to date, further helped by its strong relationship with its investors. Analysts following the company say Keppel’s management is exceptionally transparent with its investors through video conference calls, company magazines and additional sale-side expertise.
“Keppel’s stock has risen 12% year to date – it’s doing okay but it hasn’t knocked the lights out,” concedes one head of equities research at a regional brokerage. “But it’s in a very strong position going forward, and its investors feel comfortable with that because they understand everything about Keppel’s position. It’s a conglomerate that is exceptionally well managed.”
BEST EXECUTIVE
Piyush Gupta, CEO, DBS Group
For his achievements in leading Singapore’s largest bank to 11 straight quarters of growth, for energising his 18,000 army of staff, and for staying focused on this overarching goal of growth, Piyush Gupta, chief executive of DBS, remains Asiamoney’s top pick for Singaporean executive of the year the second year running.
Gupta has been praised throughout for building up DBS’ non-interest income, articulating his growth plan for areas such as wealth management and small-to-medium-sized businesses and for delivering solid quarterly results – all while banking conditions remain challenging worldwide.
“What stands out is that he is still speaking his original game plan very well and he has clearly been pushing into Indonesia which we believe will be a solid growth market for the bank,” says one Singapore-based analyst. “If you look at Singapore bank issues, loans growth is slowing down and that’s been a big challenge. But Piyush built the other areas of the business quite quickly and continues to build upon management strength and depth to outrun the existing challenges.”
Since Gupta took the helm of DBS three years ago, the bank’s income has grown more than 29% from the first quarter of 2010 to the third quarter of 2012. Further, in the first nine months of 2012, total income grew more than 7% to SGD6.1 billion and its return on equity for the third quarter grew to 11.7%, from 11.3% the previous year.
In addition, Gupta’s energy continues to improve morale amongst staff, say analysts and headhunters. “I hear from friends in DBS that morale improved has and Piyush has taken the bank’s professionalism and to the next level,” says one banks analyst. “When you speak to a lot of out-of-work bankers in Singapore, they say DBS is the company that they are hoping to join. And Piyush has helped this by taking on a lot of high-calibre people.”
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