The Largest Companies In SGX That You Might Never Heard Of

I used to think that the Straits Times Index (SGX: ^STI) is made up of the 30 largest companies listed on the SGX. And I wasn’t alone in thinking that way.

I was proven wrong. In a scan of listed companies in Singapore, I realise that there are some companies that are actually very large by market capitalisation but are not included in the STI. One such company is Great Eastern Holding Limited (SGX: G07). Due to its long history and strong presence in Singapore, it is a company that most have heard of. However,the same cannot be said for the next example.

“Isn’t That A Name Of A Road?”

The first time I heard about Dairy Farm International Holdings Ltd (SGX: D01), I thought to myself “Isn’t that a name of a road somewhere near Bukit Panjang?” I had no idea that Dairy Farm is a pan-Asian retailer which owns multiple brands of stores such as Guardian, Cold Storage, Giant Hypermarket and even 7-Eleven. In 2013, Dairy Farm operates a total of 5889 retail outlet across Asia. The company has a market capitalization of US$12.3 billion. That is larger than the ComfortDelgro Corporation Limited (SGX: C52) and Singapore Press Holdings Limited (SGX: T39) COMBINED! It is roughly the size of the largest regional property developer, CapitaLand Limited (SGX: C31).

The Good

The company operates convenience stores, supermarkets, hypermarkets, health and beauty stores, and even restaurants. All these are considered to be relatively stable and defensive businesses. And it shows in its income statement. Over the past 8 years, both the company’s revenue and net income has been growing steadily without huge fluctuation.  In 2007, the company achieved revenue of US$5.9 billion and a net profit of US$258.2 million. In 2013, the company recorded US$10.3 billion in sales and US$500.9 million in profit. The company has definitely proven itself to be a stable and growing business.

The Bad

Although it is not a well-known company in Singapore and it is not part of the STI despite its size, its valuation is not really considered “cheap”. The company is trading at a price to earnings ratio of 24.4 times and a price to tangible book value of 14.1 times with a dividend yield of only 2.5%. You can read an argument about the company here, an analysis of it here and here.

Foolish Summary

Dairy Farm International Holdings Ltd is a major player in the retail space. Despite its exclusion in the STI, investors should not to dismiss this company too soon.

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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 contributor Stanley Lim does not own any companies mentioned above