BILLION DOLLAR CLUB:
ENERGY – FOSSIL FUELS + CHEMICALS + HOLDING COMPANIES + MINERAL RESOURCES + UTILITIES
The past year or so has seen a turn in fortunes for the global energy and commodities sector. While the market was bracing for a drop in demand because of the pandemic, the attendant supply chain disruption put a constraint on deliveries and prices were further raised when demand for oil, minerals and crops was maintained or even increased as economies recover from the worst of the pandemic. As such, many companies in this sector were able to deliver record earnings.
The overall sector winner is The Straits Trading Co, which also picked up the growth in PAT award at a CAGR of 48.4% over the three years. Better known in recent years for its series of property investments, Straits Trading controls a separately-listed company, Malaysia Smelting Corp (MSC).
As a leading tin miner, smelter and trader, MSC was riding on an upturn in the global commodities markets. In FY2021 ended December 2021, MSC, which has been in business since 1887, reported earnings of $20.7 million versus just $3.3 million in the preceding year.
Straits Trading, meanwhile, reported earnings of $234.4 million in FY2021 ended December 2021, versus $51.5 million recorded in FY2020. Revenue in the same period was $396.6 million, up 28.4% y-o-y. The stronger bottom line was attributed by the company to fair-value gains of its real estate in Singapore, Australia and Korea.
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Almost peerless among local companies, Straits Trading can claim a history of 135 years and counting. To mark its heritage, the company has organised a shareholders’ club, giving shareholders access to investment opportunities and events highlighting the company’s rich history.
Golden Energy and Resources or GEAR, takes two of the remaining awards in this sector: Returns to shareholders with a CAGR of 31.8% and weighted ROE of 14.36%. The Indonesia-based company owns stakes in coal mines in Indonesia and Australia. This is a market that over the past year has enjoyed a big surge in demand, in line with the overall upswing in energy prices.
In the most recent full-year FY2021 ended December 2021, GEAR reported earnings of US$251.3 million ($358.8 million), up by 629% y-o-y over the preceding FY2020. Revenue in the same period was up 61% to US$1.87 billion, thanks to higher coal prices. While GEAR was able to capture the stronger market in coal, it has over the past few years consciously diversified into gold mining. By doing so, the company can diversify its earnings base and not be exposed entirely to just one commodity.
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CENTURION CLUB:
APPLIED RESOURCES + CHEMICALS + ENERGY – FOSSIL FUELS + MINERAL RESOURCES + UTILITIES
Oil and gas players shine following lift in energy prices
CEO Teo Hark Piang runs Union Gas with his family, including father and founder Teo Kiang Ann / Photo: Albert Chua
Union Gas Holdings, a featured winner last year, is again the overall sector winner for this industry category in the Centurion Club. In addition, Union Gas, with a weighted ROE of 33.46%, took top spot in this category as well.
For more than 40 years, Union Gas has been a supplier of fuel products in Singapore, ranging from liquefied petroleum gas to natural gas to diesel. The company’s integrated operations have given it ownership and control of the whole LPG (liquefied petroleum gas) chain, from procurement to bottling and from storage to wholesaling and retailing.
To date, the company owns two out of the four bottling licences and bottling plants in Singapore. Union Gas is also one of the largest suppliers of bottled LPG cylinders to domestic households here, on top of its market serving commercial customers.
RH Petrogas, meanwhile, won for return to shareholders within this Centurion Club industry sector. It generated a CAGR of 74.2% over the three years. The company describes itself as an independent upstream oil and gas company, with business activities covering the full range of upstream activities from exploration to the development and production of oil and gas resources. Its assets are in Indonesia and Malaysia.
Tiong Ik King, the company’s chairman, noted in the FY2022 annual report that the higher crude oil prices in 2021 had provided a “strong fillip” for the company. As the company was able to continue with production without major interruption and achieve higher selling prices, the result was a “strong operating cash flow” for the year.
“With the improved financial position, the group plans to resume certain capital projects and exploration activities in 2022, which had been deferred during the pandemic,” said Tiong in the annual report.
Another oil-related company, Sinostar PEC Holdings, was lauded for generating the best PAT growth of 42.1% CAGR. The China-based company describes itself as one of the largest producers and suppliers of downstream petrochemical products within the 400km radius of its production facilities within the Dongming Petrochem Industrial Zone in Dongming County of China’s Shandong province. Sinostar is able to tap a comprehensive logistics network and serve customers operating in the nearby populous and industrialised provinces such as Shandong, Henan, Anhui, Shanxi, Shaanxi, Sichuan, Hebei, Hubei and Zhejiang.
In FY2021 ended December 2021, the company reported earnings of RMB237.4 million ($46.8 million), up 49% over FY2020. Revenue in the same period was up by 48.2% to RMB4.72 billion, with sales growth seen across all its various product segments. Li Xiangping, executive chairman and CEO of the company, says Sinostar PEC has reported a set of commendable results, especially with various economic challenges.
“We’ve pared down our debt, which we had incurred to expand our production capacity; ending the financial period with a healthy balance sheet. The demand for the products is still relatively positive and we are confident of the long-term growth of our products. We will continue to be prudent in our operations and seize good opportunities.”
