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With CapitaMalls Asia and Olam Set To Depart, Who’s In?
Perspective | 22 April 2014
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By: Shane Goh
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By: Peter Ng
Articles (81) Profile

Previously, we have identified and presented a list of criteria to shortlist potential replacement candidates for Olam International and CapitaMalls Asia (CMA).

And now, let’s look at the possible candidates.

The Next Commodity Trader In Line
There are three potential candidates which reside in the mid cap FTSE ST Mid Cap Index to replace the resource player’s place on the STI.

Bumitama Agri is an Indonesian palm oil plantation company which operates six crude palm oil mills, with its revenue contribution mainly derived from other notable resource companies like Wilmar International and Sinar Mas Group. Despite fulfilling most of the criterias, at a market capitalisation of $1.9 billion, it would be a tough one to land Bumitama as one of STI’s constituents. Clocking a trading volume of 1 million transactions per day is relatively soft compared to the other three.

Being a diversified agribusiness company, IndoFood Agri Resources (Indoagri) is engaged in a range of business activities stretching from oil palm plantation, cultivation of different agriculture products to research and development. Similar to Bumitama, Indoagri’s market capitalisation of $1.5 billion, ranks it the lowest among the three candidates.

With its business activities coinciding with the other two, First Resources is a palm oil plantation company which operates twelve palm oil mills in Indonesia. Listed on the Singapore Exchange in 2007, First Resources commands a market capitalisation of $3.9 billion which is the closest to Olam compared to the other two. Average trading volume per day is registered at five million providing the stock with sufficient liquidity. Lastly, earnings have not only been stable but also registered a consistent year-on-year growth since its listing.

The Rise Of A Property Giant
In the case of CMA, we identified four potential candidates to replace CMA’s property developer berth on the STI. Three of them reside in the FTSE ST Mid Cap Index.

Keppel Land (KepLand) is the property arm of STI’s constituent Keppel Corporation. It has two business segments: property development and fund management. KepLand develops residential and commercial buildings. Notable developments include Keppel Bay and Marina Bay Financial Centre. It has two funds, namely, SGX-listed Keppel REIT and Alpha Investment Partners.

UOL Group dabbles in property development and investments as well as hotel operations and management services. It owns 19 hotels and serviced suites across Asia with 12 managed under the PARKROYAL brand and five bearing the Pan Pacific brand. Iconic developments include Novena Square and Newton Suites.

While not part of the index, Frasers Centrepoint does not hold back the punches. The company has its hands in residential, commercial and hospitality developments. The latter’s footprint stretches three continents with a concentration in Asia Pacific. It also has interest in two REITs: Frasers Centrepoint Trust and Frasers Commercial Trust.

Ascendas REIT is the only non-property developer firm on this list. It is a fund filled with 103 industrial properties in Singapore and two business parks properties in China servicing a tenant base of about 1,300 international and local clients. As of 31 December 2013, its assets are worth $7.2 billion.

SI Research Takeaway
Even if one might be right in identifying the next set of companies to replace the outgoing two, the share price of these potential replacements have already appreciated significantly.

As such, investors ought to determine how much a company or investment is worth before buying.

We will end off with a quote from Warren Buffet, “Price is what you pay, value is what you get,” despite being a good stead, overpaying for an investment is certainly not a wise move.

This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.

Olam Int'l  1.810 +0.090 +5.23%   
Business: Co is engaged in sourcing, processing, packaging and merchandising agricultural products. [FY17 Turnover] Food staples & packaged foods (37.2%), confectionery & beverage ingredients (31%), edible nuts, spices & vegetable ingredients (17.1%), industrial raw materials, ag logistics & infrastructure (14.7%).

Insight: Nov-18, 9M18 revenue rose 15.7% due to increased t... Read More
Bumitama Agri  0.700 +0.010 +1.45%   
Business: Co produces and trades in crude palm oil (CPO), palm kernel (PK), and related products for refineries in Indonesia.

Insight: Aug-18, 1H18 net profit increased by 10% to IDR619... Read More
Indofood Agri Resources  0.200 +0.001 +0.50%   
Business: Diversified agri-business mfg & retailing cooking oil, with oil palm, rubber & sugar plantation in Indonesia. [FY17 Turnover] Edible oil & fats (65.6%), plantations (34.4%).

Insight: Oct-18, 9M18 revenue slid 15.6% mainly due to lowe... Read More
First Resources  1.660 -0.020 -1.19%   
Business: Co engages in the cultivation and maintenance of oil palm plantations. [FY17 Turnover] Refinery and processing (92.8%), plantations & palm oil mill (7.2%).

Insight: Aug-18, 1H18 sales dipped marginally by 3.7% mainl... Read More
Sinarmas Land  -- -- --   
Business: A real estate development firm. [FY17 Geographical] Indonesia (93.8%), International (3.2%), others (3%).

Insight: Aug-18, 1H18 revenue declined 31.4% to $384.3m att... Read More
Wilmar Int'l  3.250 -- --   
Business: Co's integrated agribusiness model encompasses the entire value chain of the agricultural commodity processing biz, from origination and processing to branding, merchandising and distribution of a wide range of agricultural pdts.

Insight: Nov-18, 9M18 revenue rose 3.9% to US$33.6b mainly ... Read More
UOL Group  6.690 +0.11 +1.67%   
Business: Co engages in property development, property investments, and hotel businesses. [FY17 Turnover] Ppty devt (52.2%), hotel ops (23.6%), ppty invs (14.9%), invs & others (9.3%).

Insight: Aug-18, 1H18 revenue jumped 72.9% to $1.3b attribu... Read More
Frasers Property  1.760 +0.030 +1.73%   
Business: Co is an integrated real estate player. [FY16 Turnover] Properties Strategic Business Units (SBU) (86.4%), International Business (13.6%).

Insight: Aug-18, 9M18 revenue decreased by 4.3% while net p... Read More
Frasers Commercial Trust  1.450 -0.020 -1.36%   
Business: Co invests in a diverse portfolio of real estate and real estate related assets, primarily focusing on office and retail assets.

Insight: Oct-18, FY18 gross revenue of $133.3m was 14.8% lo... Read More
Ascendas REIT  2.710 -0.02 -0.73%   
Business: Co invests in the real estate markets of Singapore and Australia.

Insight: Oct-18, 2Q18 revenue increased by 1.1%, mainly due... Read More

Join The Conversation
The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

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