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 Company Limited (SGX:S20) was incorporated in Singapore in 1887 and is an investment company with diversified interests across Asia Pacific in real estate, hospitality, and resources.
- Straits Trading's notable and key investments include
- Straits Real Estate Pte Ltd (SRE),
- Malaysia Smelting Corp (SGX:NPW),
- Far East Hospitality Holdings Pte Ltd (FEHH), and
- ARA Asset Management Limited (ARA) (previously listed on SGX since 2007, privatised in 2017).
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.
- In1960, Straits Trading formed its property division which began its journey to diversification. Malaysia Smelting Corp, which Straits Trading then held a 58% interest, took over Straits Trading’s smelting business in 1982.
- 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 acquired a 20.95% stake in ARA, co-established SRE, and formed Far East Hospitality Holdings Pte. Ltd. (FEHH) through a 30-70 joint venture with Far East Orchard (SGX:O10), with Straits Trading owning 30%.
- In May 2020, Straits Trading increased its stake in ARA to 22.1% after AVIC Trust divested its 20.48% stake in ARA.
- At present, Straits Trading centres its business focus on its real estate ecosystem.
Straits Trading's Business Operations
- Straits Trading has three main operating segments:
- Resources,
- Real Estate, and
- Hospitality.
- Its real estate business is its main contributor to profit before tax, accounting for 85% in FY19.
- [ Summary of the report to be updated. Meanwhile, refer to the 30-page report attached below for complete analysis on Straits Trading Company Limited (SGX:S20). ]
- See also
Wei Le CHUNG
DBS Group Research
|
Derek TAN
DBS Research
|
https://www.dbsvickers.com/
2021-02-04
SGX Stock
Analyst Report
3.50
SAME
3.50
