It must be time for Singapore companies that have interlocking business relationships and complex cross-holdings to come up with a natty local name for themselves. After all, Japan has its keiretsu. Korea has its chaebol. Hong Kong has its hongs. There is, it has to be said, no shortage of conglomerates that would fall neatly into this category. They include industrial conglomerates Jardine, Keppel and property conglomerate Mapletree to name three. Here is a fourth – the “United Overseas” group of companies. The big daddy of the United Overseas family of companies is United Overseas Bank (SGX: U11), which is…
After all, Japan has its keiretsu. Korea has its chaebol. Hong Kong has its hongs.
There is, it has to be said, no shortage of conglomerates that would fall neatly into this category. They include industrial conglomerates Jardine, Keppel and property conglomerate Mapletree to name three. Here is a fourth – the “United Overseas” group of companies.
The big daddy of the United Overseas family of companies is United Overseas Bank (SGX: U11), which is the third-largest quoted bank on the Singapore Exchange. UOB, which was founded in 1935, has consistently delivered a high Return on Equity over the years. Over the last ten years, its RoE has rarely, if ever, dipped below 10%. Since the turn of the Millennium, it has delivered an annual total return of 9.5%.
United Overseas Insurance (SGX: U13) is a subsidiary of UOB. The S$276m company is involved in general insurance in Singapore and other ASEAN countries. Singapore accounts for around 84% of annual revenues, while the latter makes up about 12%. Shares in the insurer tend to approximate to its book value. At S$4.60 a pop they current value the company at 0.9 times net tangible assets. Over the last 14 years, UOI has delivered an annual total return of 13.8%.
Staying with financials, UOB-Kay Hian (SGX: U10) is the broking arm of the United Overseas group. It has been around for over 40 years. The company, which has operations in Singapore, Malaysia, Thailand, Hong Kong and Indonesia, provides broking services as well as financial advisory and investment banking. Since its flotation in October 2000, the shares have delivered an annual total return of 12.8%.
Another company in the “United Overseas” stable is United Industrial Corporation (SGX: U06). The company, which started life as a detergent maker, is today a property developer. Its real-estate portfolio includes Mon Jervois, The Trizon and Archipelago in Bedok. Since 2006, UIC has paid an unchanged dividend of S$0.03 per share, which translates to an unspectacular historic yield of 0.09%. However, the annual total return since 2000 has been a not unimpressive 13.5%.
UOL Group (SGX: U14) is another property arm of the United Overseas empire. It started life as Faber Union but changed its name to United Overseas Land when UOB acquired a controlling stake. The company’s portfolio includes residential, commercial and hospitality following its acquisition of Pan Pacific Hotels Group. UOL has delivered an annual total return of around 18% over the last 14 years.
Just to keep everyone on their toes, not every company in the United Overseas stable begins with the letter “U”. Singapore Land (SGX: S30), which is in the process of being taken private by United Industrial Corporation, has over 2m square feet of office space and 1m square feet of retail space in Singapore. They include SGX Centre and Marina Square. Since 1 January 2000, Singapore Land has returned about 9% including dividends.
Haw Par (SGX: H02) is connected to United Overseas through Wee Investments and UOB Asset Management, which owns 26% and 10% of the outstanding shares respectively. In turn, Haw Par owns 44% of UOL Group.
Haw par was once a pharmaceutical company but today it is predominantly an investment company. Healthcare accounts for three quarters of annual revenues but it is investments that make up the lion share of profits. Since the Millennium, shares in Haw Par have quintupled, which equates to an annual total return of 12%.
United Overseas is a sprawling business with its fingers in banking, property, leisure, insurance, broking and hospitality. As to which is the best company to buy, any one of the six companies in the conglomerate would have delivered a decent return. That is provided if you had continually reinvested the dividends.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.