Have you ever felt that Singapore’s stock market is too small to have fast growing companies? Well, think again. Here are three companies that have been growing their net income and revenue at an average clip of more than 30% per year over the past 10 years. As most companies’ latest financials are only up to the end of September 2014, my review period for the financial performance of the trio is from September 2004 to September 2014. Let’s see if the growth of the three companies can continue. Let the games begin Casino and resort operator Genting Singapore PLC (SGX: G13)…
Have you ever felt that Singapore’s stock market is too small to have fast growing companies? Well, think again.
Here are three companies that have been growing their net income and revenue at an average clip of more than 30% per year over the past 10 years. As most companies’ latest financials are only up to the end of September 2014, my review period for the financial performance of the trio is from September 2004 to September 2014.
Let’s see if the growth of the three companies can continue.
Let the games begin
Casino and resort operator Genting Singapore PLC (SGX: G13) is actually one of the fastest growing companies for the period in review. The company’s revenue and net income had increased at phenomenal compounded annual rates of 59% and 41.5%, respectively, over that period.
Back in September 2004, Genting Singapore was without any real sustainable business and only managed to book revenue of a mere S$28.2 million over the past 12 months then. Fast forward to today, and the company’s now operating a successful integrated resort in Singapore, the Resorts World Sentosa. For the 12 months ended September 2014, Genting Singapore had brought in revenue of S$2.92 billion and earned a profit of S$686 million.
But that is then and this is now. Currently, Genting Singapore’s facing a slowdown in growth due to the softening Chinese economy and a lower influx of Chinese tourists into Singapore. Genting Singapore is not sitting idly by of course – the firm is planning to use the successful Resorts World Sentosa as a model for an upcoming development in South Korea’s Jeju Island. If successful, the Jeju Island development, which is slated to begin construction in the second quarter of this year, might represent the next stage of growth for the company.
Under the sea, under the sea
Straco Corporation Ltd (SGX: S85) might not be a very well-known company, but its assets are. As an owner of multiple tourist attractions in China and Singapore, Straco has the famous Shanghai Ocean Aquarium under its belt, along with another aquarium, the Underwater World Xiamen, and the Singapore Flyer.
The company, with a market capitalisation of S$650 million, has compounded its revenue at an annual rate of 21% to S$87.5 million over the decade in question. Meanwhile, its net profit grew even faster at a pace of 50% annually; the firm clocked S$38.9 million in profit over the 12 months ended September 2014.
Straco has had a history of being a great operator of tourism assets and has been able to generate strong returns on those assets for its shareholders. Late last year, the company bought over the iconic local tourism landmark, the Singapore Flyer. The observation wheel has not been a particular easy operation to run given that it had fallen into receivership before being bought over by Straco. But if Straco can turn things around at the Flyer, it might just represent the next stage of growth for the company.
Southeast Asia’s software king
The “tech-boom” is not a phenomenon that’s applicable only to the U.S. Singapore-based Silverlake Axis Ltd (SGX: 5CP) is a software outfit that has been thriving in Southeast Asia – over the decade in review, the company has seen its revenue and net income grow at impressive compounded annual rates of 32.4% and 31.2% respectively.
Currently, Silverlake Axis is providing core software systems for many financial institutions in the region. In fact, according to a recent presentation deck from the firm, “40% of leading SE Asian banks use Silverlake’s software and services.” With technology increasingly being integrated into our everyday life and gaining prominence in the businesses of many companies, it seems that Silverlake Axis would have more legs to run.
Past performance is never a guarantee of future prospects. But, understanding how and why companies are able to grow rapidly may give us an insight into spotting companies with big future growth potential. And, this is very useful for investors as eye-catching corporate growth is often accompanied by satisfying long-term returns. From the start of 2006 to today, shares of Genting Singapore, Straco, and Silverlake Axis have gained 176%, 410%, and 382% in price, respectively.
To keep up to date on the latest financial and stock market news, sign up for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can GROW your wealth in the years ahead. Also, like us on Facebook to follow our latest hot articles.
The Motley Fool's purpose is to help the world invest, better.
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 owns Genting Singapore and Straco Corporation