SINGAPORE'S billion-dollar club - that is to say, listed companies with over $1 billion of market capitalisation - grew to 77 last year, from 67 in 2005.
The top 10 companies alone had a market cap of around $270 billion, representing just under half of the total market cap of $558 billion for the 631 companies included in the BT-LEK shareholder scorecard study. The study looked at the total shareholder returns of these companies on a one-, three-, five- and 10-year basis as at Dec 30, 2006.
'This is a marked increase (in market cap) of over 40 per cent from last year's top 10, despite the numerous new listings of small stocks the market saw in 2006. It suggests a parallel theme of 'that which has, begets more' ', said Sharad Apte, managing director of LEK South-east Asia practice.
On a one-year basis, Pine Agritech - a China producer of soy-based health foods and food ingredients - registered the highest TSR among club members, at 369.3 per cent.
This relatively new entrant to the club last year saw net profit surge 129 per cent to a record 538 million yuan (S$107.4 million) as sales jumped 98 per cent to 1.58 billion yuan, which contributed to its strong one-year showing.
However, on a three-year basis, Wheelock Properties took top honours with a TSR of 111.1 per cent. It was also ranked the top performer in aggregate in a comparison across all four time periods.
Raffles Education, a regional operator of design and business schools, registered the highest five-year TSR at 119.9 per cent, while shipyard and shipping group Cosco Corp took top spot over a 10-year period, with a TSR of 35.4 per cent.
'Looking at the club this year, what I think we're seeing is a lot of the billion-dollar-club companies are starting to spread their wings outside of Singapore in a much bigger way,' said Mr Apte. 'A lot of them are already regional, but now they're really starting to go global.'
He cited SingTel and Singapore Airlines (SIA), which have made - or are planning to make - large investments around the world, as examples of this trend.
'Companies like Keppel and SembCorp are going much more regional, and it is a continuation of that theme we've seen where these companies have done a great job in their home markets or the region, and now they've figured that to continue to get good growth, they have to go and compete in other parts of the world,' Mr Apte said.
Just last week, following months of rumours, speculation, denials and share price run-ups, SIA confirmed that it is close to buying a strategic stake in Shanghai-based China Eastern Airlines, although no figures were released.
But does size and performance have a strong correlation? On a 10-year basis, slightly more than half - six to be precise - of the top 10 TSR performers were billion-dollar-club members. This figure also holds true for the three- and five-year time periods. However, on a one-year basis, only one company among the top 10 TSR performers had a market cap of over $1 billion - Pine Agritech. Instead, six were small caps (less than $100 million in market cap) while the remaining three were mid-caps.
LEK consultant Darryn Tan said that this was not unexpected, due to the volatility of smaller companies.
'That's not something unusual for small cap stocks,' he said. 'If you examine the numbers, you find small caps also have the worst TSRs. They're definitely more volatile - high risk, high return.'
