Every investor is on the lookout for companies that can grow their earnings and cash flow over the long term. Such companies qualify as great candidates to hold for the long term, as the value of the business will steadily increase over time, and the investor may also enjoy higher levels of dividends along the way.
The problem, as always, is in finding companies that display strong business moats, prudent management, and a sturdy, well-thought-out long-term plan. In order to find such companies, investors need to look out for several traits: a large (and hopefully) growing market, management with a long-term strategic plan and vision, and a strong market presence that can allow such companies to penetrate into either new segments or new territories.
Here are three companies I believe possess such traits and have the potential to grow and multiply your investment over time.
1. iFast Corporation Limited
iFast Corporation Limited (SGX: AIY) is a financial technology (fintech) company that operates a portal for the distribution and purchase of financial products such as equities, fixed income, and unit trusts. The group is present in Singapore, Malaysia, Hong Kong, India, and China and acts as a middleman between investors and product sellers.
As of 30 June 2019, iFast had assets under administration (AUA) of S$9.04 billion, which was a record high for the group since the business was started in 2000. CEO Lim Chung Chun believes the group still has a long runway for growth as there is a large addressable market for wealth management in Asia that has not been adequately served by existing players. This is why the group has a long-term goal of growing its AUA to S$100 billion by 2028.
iFast is also the pioneer in the fintech industry, and its first-mover advantage has given it a dominant share of the market, despite the appearance of other competitors. By staying abreast of the latest demands and needs of the market, iFast has consistently stayed ahead of the curve and has remained at the forefront of innovation when it comes to addressing clients’ pressing needs. I believe there is significant room for the group to grow and expand its market share over time.
2. Haw Par Corporation Ltd
Haw Par Corporation Ltd (SGX: H02) is a conglomerate with four major divisions: healthcare, leisure, property, and investments. Its healthcare division owns the iconic global brand Tiger Balm, which manufactures a range of pain patches, ointments, and other medicinal products for use in sports and for injuries. The group also owns an aquarium asset in Thailand and several properties in Singapore and Malaysia.
Tiger Balm has been growing steadily over the years to dominate the bulk of Haw Par’s earnings, and there is significant room for this growth to continue over the years. Haw Par continues to introduce new products and to target the sports segment in Western countries, and it’s positioned to do well as the brand is now ubiquitous in many countries. The group has a strong market share in its healthcare division, and there is great potential to grow this further over time.
3. Raffles Medical Group Ltd
Raffles Medical Group Ltd (SGX: BSL) runs a hospital and clinical services in Singapore and has a network of clinics in 14 cities within five countries. The group also owns two hospitals in China, one of which has opened in Chongqing province, while the other is still under construction in Shanghai.
CEO Loo Choon Seng is not one to rest on his laurels, even though he has built up RMG over the years into a strong and reputable healthcare institution. As Singapore’s healthcare space has become saturated with limited available land area to construct more hospitals, the group decided to venture into China with its first overseas hospital opening and operating in Chongqing since January this year.
There is a second hospital being constructed in Shanghai that will begin operations in early 2020. Dr Loo has also set his sights on extending RMG’s reach further into China — should these first two hospitals work out well — by constructing and opening even more hospitals to cater to the demand from Chinese. Over time, if these plans come to fruition, it will result in the group being able to significantly grow its revenue and net profit.
The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of iFast Corporation Limited, Haw Par Corporation Ltd, and Raffles Medical Group Ltd. Motley Fool Singapore contributor Royston Yang owns shares in iFast Corporation Limited and Raffles Medical Group Ltd.