MENU

What Does Straits Trading Co Ltd Do and How Does It Make Money?

It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business Straits Trading Co Ltd (SGX: S20) is involved in and how it generates its revenue.

Straits Trading, as a quick background, has stakes in real estate, hospitality, resources and investments in the Asia Pacific region.

Let’s take a look at the table below for the revenue contribution of each segment for the financial year ended 31 December 2016 (FY2016):

Source: Straits Trading Co Ltd Annual Report 2016

Revenue from the Resources segment, which made up around 96% of the firm’s total revenue in FY2016, was S$495.2 million.

Under this business segment, Straits Trading’s main activities are in the “smelting of tin concentrates and tin bearing materials, the production of various grades of refined tin metal and the sale and delivery of refined tin metal and by-products, as well as investments in other metals and mineral resources”.

The firm owns 54.8% of Malaysia Smelting Corporation Berhad or MSC (SGX: NC9), the largest independent custom tin smelter.

Revenue from the Real Estate segment, which made up the rest of the total revenue, was S$18.3 million.

This business segment is involved in property investment, sales and rental, property development, and property and real estate fund management.

Straits Trading has a 21% stake in ARA Asset Management Limited (as of 12 April 2017), and 89.5% stake in Straits Real Estate Pte Ltd. ARA Asset Management was delisted from the Singapore Exchange early this year after a buyout by a consortium that included Straits Trading.

Other than the two business segments shown above, the firm also has two other business segments, but they did not bring in any revenue for FY2016. These two segments are Hospitality and Others.

The Hospitality business includes hotel ownership and hotel management under Far East Hospitality Holdings Pte Ltd – which comprises of a 30% investment in Far East Hospitality Trust (SGX: Q5T).

Meanwhile, the Others business segment consists of group-level corporate and treasury services.

For (free!) stock analyses and investing tips, sign up here for your 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.

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. The Motley Fool Singapore has recommended shares of Singapore Exchange Limited. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.