Companies That Are Exposed To The US$1.39 Trillion Smart Cities Pie

Smart Cities could be one of the markets with great growth potential. According to Mordor Intelligence, the Smart Cities market is projected to grow by 20.5% annually from US$387 billion in 2014 to US$1.39 trillion in 2020.

The basic premise of Smart Cities is to make use of the Internet and other digital technologies to improve the lives of people. There are companies in Singapore’s stock market that are exposed to the Smart Cities market. Let’s take a look at some of them.

One such company would be Singapore Technologies Engineering Ltd (SGX: S63). In April this year, the company secured S$505 million worth of Smart Cities-related contracts around the word.

Specifically, ST Engineering had secured S$41 million worth of intelligent railway projects in Hong Kong and Saudi Arabia; S$91 million worth of contracts to supply intelligent sensors; and S$373 million worth of contracts to provide smart solutions in areas dealing with security, supply chain management, energy efficiency, and more.

Another company that has a feet in the door with Smart Cities is Keppel Corporation Limited (SGX: BN4). The company has a role to play in the Sino-Singapore Tianjin Eco-City project that was kick-started by the governments of Singapore and China in 2007.

The project sees Keppel Corp spearheading the development of a “practical, scalable and replicable model for sustainable development for other cities in China.” The project also involves Smart City elements.

While both ST Engineering and Keppel Corp have their fingers in the Smart Cities pie, that’s no guarantee that both firms stand to benefit from any potential growth in the market. If Mordor Intelligence’s estimates for the Smart Cities market turn out to be close to reality, it’s likely that many companies will be vying for a piece of the action between now and 2020. Furthermore, Mordor Intelligence’s projected growth numbers are just that – a projection.

Nonetheless, it’s be interesting to watch the development of the Smart Cities market and the roles that the companies in Singapore’s stock market can get to play.

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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 Ong Kai Kiat doesn't own shares in any companies mentioned.