Straits Trading Company Limited - DBS Research 2021-02-04: Come Get The Crown Jewel; Initiate Coverage With BUY

STRAITS TRADING CO. LTD (SGX:S20) | SGinvestors.io STRAITS TRADING CO. LTD (SGX:S20)

Straits Trading Company Limited - Come Get The Crown Jewel; Initiate Coverage With BUY

  • Significant value to be extracted upon the potential listing of ARA Asset Management Limited (ARA) in 2021/2022.
  • “Crown Jewel” ARA estimated value of S$2.06/share comes free at current Straits Trading's share price.
  • Commercial and logistics portfolios churn out stable cashflows with potential gains upon divestments.



Straits Trading Company Limited - Background


Straits Trading's Company History

  • 1887s to 1930s – Began as a tin smelting company.
    • Straits Trading was first established as a tin smelting company in 1887 as it opened its first large smelting plant in Pulau Brani, Singapore. It later expanded its operations into Malaysia through its acquisition of a second smelting plant in Butterworth, Penang, in 1902.
  • 1960 to 1980s – Established its property development business and transfer of its tin operations.
  • 1990s to 2000s – Ventured into hospitality, expanded into upstream tin operations, and Tecity’s takeover.
    • Straits Trading entered the hospitality business when Rendezvous Hotels International Private Limited took over the management of the Observation City Hotel in Perth, Australia.
    • Malaysia Smelting Corp expanded into the exploration and mining of tin through its acquisition of Rahman Hydraulic Tin Sdn Bhd (RHT).
    • In 2008, Tecity Group (Tecity) acquired a majority stake in Straits Trading and has a 74.14% deemed interest in Straits Trading (as of 16 March 2020).
  • 2009 to present – Growing of hospitality and real estate business.

Straits Trading's Business Operations

  • Straits Trading has three main operating segments:
    1. Resources,
    2. Real Estate, and
    3. Hospitality.
  • Its real estate business is its main contributor to profit before tax, accounting for 85% in FY19.





Wei Le CHUNG DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2021-02-04
SGX Stock Analyst Report BUY INITIATE BUY 3.50 SAME 3.50



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