CENTURION CLUB: APPLIED RESOURCES + CHEMICALS + ENERGY – FOSSIL FUELS + MINERAL RESOURCES + RENEWABLE ENERGY + UTILITIES
Within the Centurion Club, the Straits Trading Company won the growth in profit after tax (PAT) category in the applied resources sector and emerged as the overall winner as well. In addition, its separately listed subsidiary, Malaysia Smelting Corp (MSC) is ranked top for returns to shareholders. The group was prevented from making a clean sweep by Fortress Minerals OAJ which had the highest weighted returns to shareholders (ROE) in this sector.
Established in 1887, Straits Trading is one of the oldest listed companies in Singapore. Over the years, it has evolved into a conglomerate with varying interests in resources, property and hospitality. It also has a 52% stake in Malaysia Smelting Corp, listed on both Bursa Malaysia and Singapore Exchange S68 .
As described by executive chairman Chew Gek Khim in the company’s FY2022 ended December 2022 annual report, the year was one where the company was focused on realising the value of its portfolio.
The key development, of course, was the divestment by Straits Trading of its stake in ARA Asset Management to ESR, which led to the booking of a gain of more than $1 billion, helping to lift the CAGR of its PAT in the three years under consideration to 89%. “This further highlights Straits Trading’s distinctive edge as a conglomerate investment company, capitalising on our expertise in capital allocation to drive outsized returns,” says Chew.
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MSC, which topped this industry category for returns to shareholders, enjoyed a lift from rising commodity prices. For the three years under consideration, it recorded 42.2% in CAGR for this metric. In 2022 alone, MSC produced 19,385 tonnes of tin metal, making it one of the largest suppliers of tin metal in the world with a market share of 5%. Besides volume, it benefited from record tin prices of RM220,000 per metric tonne in early 2022.
Having started business back in 1887, MSC remains upbeat about its long-term prospects, thanks to growing demand from the electronics sector. Tin is a critical element in enhancing the capacity and lifecycle of lithium-ion batteries used to run electric vehicles.
“The ongoing global transition towards renewable energy and energy storage systems is expected to support the demand for the metal, as tin solder is broadly utilised in the production of these systems,” says Chew in MSC’s FY2022 annual report.
“We are actively pursuing opportunities to strengthen our fundamentals and seize emerging possibilities,” adds Chew. The global trend of higher commodity prices has benefited another winner, Fortress Minerals Group, a leading iron ore concentrate producer in Malaysia. More than mining, the company is also in the business of exploration, processing and sale of iron ore concentrate. The company produces magnetite iron ore concentrate with a total iron (TFe) grade of 65% and above. Its key mine is at Bukit Besi and its ores are sold to steel mills and trading companies in Malaysia and also exported to China. For the three years under consideration, the company’s weighted ROE was 34.5%.
