Firms with $500 million capitalisation in minority

The upcoming Presidential Election, if contested, will see 2.5 million Singaporeans go to the polling stations on Sept 23.

The criteria has tightened for private sector contenders, who must now have run a company of a higher worth.

To automatically qualify, the candidate must be the most senior executive of a company with shareholder equity of at least $500 million for the last three years, an increase from the previous threshold of a $100 million paid up capital.

The rationale is that the highest office of the land has custodial powers over the Republic's reserves, and the president must be able to grapple with complex financial decisions.

So how common is a company of that worth?

Currently, there are two presidential hopefuls from the private sector - Mr Mohamed Salleh Marican from publicly-listed Second Chance Properties, which has an equity of between $254.3 million and $263.25 million over the last three financial years, and Mr Farid Khan Kaim Khan of marine services company Bourbon Offshore Asia Pacific, which is the Asia-Pacific subsidiary of a French multinational marine company with a reported shareholder equity of US$300 million (S$407 million).

According to Accounting and Corporate Regulatory Authority data from March last year, there were 691 Singapore-incorporated companies with shareholders' equity at or exceeding $500 million.

Another way to assess a company's value is market capitalisation.

At the Singapore Exchange (SGX), companies with a market capitalisation of more than $500 million are in the minority.

They represent about 20 per cent of all listed companies here, according to the Securities Investors Association Singapore.

A check of SGX StockFacts yesterday showed there were 160 stocks with a market capitalisation above $500 million.

Shareholder equity is usually considered a more accurate estimate of a company's actual net worth compared to market capitalisation because the latter is dependent on share price, which can fluctuate greatly.

But market capitalisation, which is typically greater than equity value, can reflect investor confidence as stock buyers would figure in factors such as expected future earnings from a company's growth and expansion.

According to SGX'S StockFacts yesterday, 14 stocks had a market capitalisation of between $500 million and $600 million. (See chart on right.)

FILM PRODUCTION

One such company that made the news recently is mm2 Asia, which has a market capitalisation of more than $580 million and was the first local film production company to list on SGX.

It transferred to the mainboard earlier this month, more than two years after its debut on the Catalist.

Besides producing well-known local films like the Ah Boys To Men series, the company owns a majority stake in local 3D animation company Vividthree Productions, and event and concert production company UnUsUaL, which listed on the junior board in April.

It also established its own cinema chain across the Causeway, and will acquire a chain of 13 cinemas by this September.

This year, mm2 Asia has generated a total return of 11 per cent, said an SGX report on Aug 7.

Investors should note that this is lower than the benchmark Straits Times Index (STI)'s total return of 18.2 per cent, and the broader FTSE ST All-Share Index's 17 per cent.

Nonetheless, the company is growing rapidly.

mm2 Asia announced this month that there was a 30 per cent increase in its first-quarter net profit to $6.4 million, up from $4.9 million a year ago.

There are several other well-known names among these 14 stocks.

One of them is Q&M Dental Group, a popular dental chain in Singapore with a presence in Malaysia and China.

The company, which has a market capitalisation of more than $501 million, was established in November 1996.

It now operates a network of more than 70 dental and four medical outlets, and one aesthetic centre in Singapore.

Another familiar name is Vicom, which provides vehicle inspection and non-vehicle testing services in Singapore.

The company, which has a market capitalisation of more than $506 million, also offers non-vehicle testing, calibration, inspection, consultancy, and training services to industries such as aerospace, as well as marine and offshore.

Among the 14 stocks, the only real estate investment trust in the list offered the highest dividend yield.

Sabana Shari'ah Compliant Industrial Real Estate Investment Trust, which has a market capitalisation of $505 million, offered a dividend yield of 7.85 per cent.

A lot of these stocks also have a higher price-to-earnings (P/E) ratio, which suggests many of them are growth stocks.

The P/E ratio is an indication of how much the market values a stock relative to the income it has actually generated over the past 12 months.

The 30 STI constituents have simple average P/E ratio of 17 times, according to an SGX report on Monday.

In contrast, Health Management International, with a market capitalisation of more than $521 million, has a P/E ratio of over 63, while construction company NSL, with a market capitalisation of $523 million has a P/E ratio of 51.3

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