Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ec-world-reit" target="_blank" data-smartkarma-citation="entities:22842" rel="noopener">EC World Reit (ECWREIT SP)</a> 2Q22 DPU -9.5% YoY; Hit by the pre-termination compensation, though top-line remains stable</li>
<li>
<a href="https://www.smartkarma.com/entities/sasseur-reit" target="_blank" data-smartkarma-citation="entities:26807" rel="noopener">Sasseur REIT (SASSR SP)</a> 2Q22 DPU -1.6% YoY; Weak performance of variable rental income though occupancy improving</li>
<li>
<a href="https://www.smartkarma.com/entities/cromwell-european-real-estate" target="_blank" data-smartkarma-citation="entities:25889" rel="noopener">Cromwell European REIT (CERT SP)</a> 1H22 DPU +2.3% YoY; Weaknesses in I&amp;L reversions, overall portfolio metrics remain stable</li>
</ul>



EC World Reit (ECWREIT SP) 2Q22 DPU -9.5% YoY; Hit by the pre-termination compensation, though top-line remains stable

Sasseur REIT (SASSR SP) 2Q22 DPU -1.6% YoY; Weak performance of variable rental income though occupancy improving

Cromwell European REIT (CERT SP) 1H22 DPU +2.3% YoY; Weaknesses in I&amp;L reversions, overall portfolio metrics remain stable


ASEAN Builder's Scoop (12Aug22) - ECWREIT Steady Top-Line Due to Master Leases

<ul><li><a target="_blank">EC World REIT (ECWREIT SP) extends onshore loan facilities to Apr23; Receiving same terms as offshore facilities</a></li><li>CBD Grade A office rents may surpass pre-pandemic peak by 3Q22; 2Q22 rents rose 2.7% QoQ</li><li><a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745" rel="noopener">Straits Trading (STRTR SP)</a> unit acquires office/industrial buildings and land in UK for GBP130m</li></ul>

EC World REIT (ECWREIT SP) extends onshore loan facilities to Apr23; Receiving same terms as offshore facilitiesCBD Grade A office rents may surpass pre-pandemic peak by 3Q22; 2Q22 rents rose 2.7% QoQStraits Trading (STRTR SP) unit acquires office/industrial buildings and land in UK for GBP130m

ASEAN Builder's Scoop (30Jun22) - ECWREIT Extends Onshore Loan Facilities

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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FOR the 5 trading sessions that spanned Jun 10 to 16, the Straits Times Index (STI) declined 3.5 per cent, with the FTSE China A50 Index gaining 1.2 per cent, the Hang Seng Index falling 4.5 per cent and the FTSE Bursa Malaysia KLCI sliding 2.2 per cent. 

 
Overall, institutions were net sellers of Singapore stocks over the 5 sessions with S$166 million of net outflow, following the S$52 million of net outflow for the preceding 5 sessions. UOB, OCBC, Singapore Airlines, Thai Beverage and Keppel DC Reit led the net institutional outflows for the 5 sessions through to Jun 16.

 Share buybacks

 
There were 26 primary-listed stocks conducting share buybacks over the 5 sessions ended Jun 16, with a total consideration of S$122.8 million, more than doubling the previous week’s consideration tally. Wilmar International and Keppel Corporation led the consideration tally, buying back shares at average prices of S$4.08, and S$6.75 respectively.

 

Director and substantial shareholder transactions

 
The 5 trading sessions saw over 100 changes to director interests and substantial shareholdings filed for close to 50 primary-listed stocks. This included 19 company director acquisitions with 2 disposals filed, while substantial shareholders filed 15 acquisitions and 12 disposals.

 

AEM Holdings

 
The Employees Provident Fund Board’s (EPF) deemed interest in AEM Holdings (AEM) has once again crossed above the 5.00 per cent substantial shareholder threshold.  The EPF had reduced its deemed interest in AEM below the 5.00 per cent threshold on Feb 4 to 4.87 per cent when it sold some shares, but on Jun 9, it bought shares again and raised its deemed interest to 5.05 per cent.  EPF’s latest purchase of 550,000 shares at S$4.39 per share, is at a lower average price than the S$4.53 per share it had received when it sold shares and reduced its deemed interest in AEM to below the substantial shareholder threshold in February.

 

On Jun 16, AEM announced that it would create more than 300 additional jobs with the expansion of its Singapore, Malaysian and US operations. AEM’s Penang expansion will include an R&amp;D lab that will enable it to boost its R&amp;D capabilities, while it will also double its headcount in Malaysia to support the expansion, including new roles for technicians, engineers, customer support group, and supply chain management. AEM is also a Gold Sponsor and the sole sponsor of the SEMICON University Program at SEMICON SEA 2022, scheduled this week in Penang.

 

Separately, with effect from Jul 1, Andre Andonian will join the board of AEM as an independent director. At McKinsey &amp; Company, Andonian serves as a member of the global board, senior partner for the Singapore office, chairman of Japan and the managing partner for Korea. Back on May 5, AEM reported its highest quarterly revenue in its history at S$261.9 million for Q1 2022 (ended Mar 31), a 226.4 per cent year-on-year increase, while upwardly revising its FY22 revenue guidance to between S$700 million and S$750 million.

 

Mapletree Industrial Trust 

 
Between Jun 10 and 13, Mapletree Industrial Trust Management non-executive director Chua Tiow Chye acquired 250,000 units of Mapletree Industrial Trust (MIT) at an average price of S$2.49 per unit.

 
With a consideration of S$621,382, this increased his deemed interest from 0.05 per cent to 0.06 per cent. It followed his acquisition of 200,000 units at S$2.49 per unit on Feb 7 and 200,000 units at S$2.60 per unit on Jan 26.

 
Chua is also the deputy group CEO of Mapletree Investments, the sponsor of MIT. He focuses on driving the sponsor’s strategic initiatives including expanding and directing the sponsor’s international real estate investments and developments. He also directly oversees the sponsor’s global lodging sector as well as the private capital management function.

 
For the FY22 (ended Mar 31), MIT reported its gross revenue and net property income increased 36.4 per cent and 34.5 per cent year on year to S$610.1 million and S$472.0 million respectively. MIT owns 141 properties, comprising 85 properties in Singapore and 56 properties in North America, which includes 13 data centres in North America held through the joint venture with the sponsor.

 Uni-Asia Group

 
On Jun 13, Uni-Asia Group executive chairman Michio Tanamoto acquired 150,000 shares of the company for a consideration of S$156,000. At an average price of S$1.04 per share, this increased his total interest in the company from 3.24 per cent to 3.44 per cent. This closely followed his acquisition of 50,000 shares at S$1.09 per share on Jun 9. Tanamoto was appointed the executive chairman of Uni-Asia Group in April 2020.

 The Straits Trading Company

 
On Jun 13, The Straits Trading Company independent and non-executive director Tan Tiong Cheng acquired 30,000 shares of the company for a consideration of S$90,300, at an average price of S$3.01 per share. This increased his direct interest in the conglomerate-investment company from 0.03 per cent to 0.04 per cent. He is also an independent and non-executive director of UOL Group, the lead independent director of Heeton Holdings, and a non-executive independent director of Amara Holdings.

 
The same session also saw Straits Trading Company independent and non-executive director Chua Tian Chu acquire 7,000 shares of the company at S$3.00 per share.

 
Chua last acquired shares in the company in March, and both directors acquired shares in the company in January. 

 GKE Corporation

 
On Jun 15, GKE Corporation executive director and CEO Neo Cheow Hui acquired 500,000 shares of the company, for a consideration of S$52,000 at 10.4 cents per share. This increased his total interest in the provider of integrated warehousing and logistics solutions from 3.60 per cent to 3.67 per cent.

 
Neo has extensive experience in the warehousing and logistics industry which has played a pivotal role in developing high level strategies for the group and making major corporate investments over the last 20 years.

 Hong Fok Corporation

 
On Jun 10, Hong Fok Corporation executive director and joint CEO Cheong Sim Eng acquired 43,000 shares of the company, for a consideration of S$41,925 at 98.0 cents per share. Cheong maintains a 20.27 total interest in the property developer.

 
He is principally involved in the group’s overall operations and management, with greater emphasis in Singapore and he has over 37 years of experience in the property development business.

 Grand Venture Technology

 
Between Jun 13 and 15, Grand Venture Technology executive chairman Ricky Lee Tiam Nam acquired 50,000 shares of the company at an average price of 76.8 cents per share. With a consideration of S$38,375, this increased his direct interest in the innovative precision manufacturer from 15.33 per cent to 15.34 per cent. 

 
Responsible for the overall strategic direction and development of the group, Lee was one of the founding directors of the company.

 
He has over 38 years of experience in the manufacturing, assembly/servicing and precision engineering industries, beginning his career in 1982 as a machinist in Pan-World Precision Engineering.

 
On Jun 15, GVT executive director and CEO Julian Ng Wai Yuen also acquired 10,000 shares at an average price of 76.5 cents per share. This increased his direct interest in the company from 3.54 per cent to 3.55 per cent. Ng has more than 20 years of experience in the manufacturing and precision engineering industries.

 
In early May, GVT reported 19.5 per cent year-on-year growth in Ebitda and 8.9 per cent growth in net profit after tax for Q1 FY2022 (ended Mar 31), on the back of a 41.0 per cent revenue increase from S$23.0 million in Q1 FY2021 to S$32.5 million in Q1 FY2022.

 
Lee noted with the results that robust demand from the semiconductor industry saw GVT make good progress in its discussions with potential customers engaged in the manufacture of metrology and inspection, etching, and wafer deposition equipment. Lee added that when fully onboarded, these customers are expected to be the key drivers for the front-end semiconductor activities of GVT in the near future. In Q1 FY2022, the semiconductor sector contributed 67.2 per cent to the group’s total revenue, comparable with the 71.1 per cent contribution in FY21 and 68.7 per cent contribution in 2020.

 Oxley Holdings

 
Between Jun 14 and 15, Oxley Holdings executive director and deputy CEO Eric Low See Ching acquired 100,000 shares of the company at 17.1 cents per share.

 
Low maintains a 28.13 per cent direct interest in the firm and is responsible for the operation of the group including sales and marketing, project development, business development and financial management. He also assists the CEO in charting and executing strategic plans.

 Inside Insights is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/buybacks-surge-mapletrees-chua-tiow-chye-adds-to-mit-stake"> read </a>the original version.
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    Share Buybacks


FOR the 5 trading sessions that spanned Jun 10 to 16, the Straits Times Index (STI) declined 3.5 per cent, with the FTSE China A50 Index gaining 1.2 per cent, the Hang Seng Index falling 4.5 per cent and the FTSE Bursa Malaysia KLCI sliding 2.2 per cent. 

 
Overall, institutions were net sellers of Singapore stocks over the 5 sessions with S$166 million of net outflow, following the S$52 million of net outflow for the preceding 5 sessions. UOB, OCBC, Singapore Airlines, Thai Beverage and Keppel DC Reit led the net institutional outflows for the 5 sessions through to Jun 16.

 Share buybacks

 
There were 26 primary-listed stocks conducting share buybacks over the 5 sessions ended Jun 16, with a total consideration of S$122.8 million, more than doubling the previous week’s consideration tally. Wilmar International and Keppel Corporation led the consideration tally, buying back shares at average prices of S$4.08, and S$6.75 respectively.

 

Director and substantial shareholder transactions

 
The 5 trading sessions saw over 100 changes to director interests and substantial shareholdings filed for close to 50 primary-listed stocks. This included 19 company director acquisitions with 2 disposals filed, while substantial shareholders filed 15 acquisitions and 12 disposals.

 

AEM Holdings

 
The Employees Provident Fund Board’s (EPF) deemed interest in AEM Holdings (AEM) has once again crossed above the 5.00 per cent substantial shareholder threshold.  The EPF had reduced its deemed interest in AEM below the 5.00 per cent threshold on Feb 4 to 4.87 per cent when it sold some shares, but on Jun 9, it bought shares again and raised its deemed interest to 5.05 per cent.  EPF’s latest purchase of 550,000 shares at S$4.39 per share, is at a lower average price than the S$4.53 per share it had received when it sold shares and reduced its deemed interest in AEM to below the substantial shareholder threshold in February.

 

On Jun 16, AEM announced that it would create more than 300 additional jobs with the expansion of its Singapore, Malaysian and US operations. AEM’s Penang expansion will include an R&amp;D lab that will enable it to boost its R&amp;D capabilities, while it will also double its headcount in Malaysia to support the expansion, including new roles for technicians, engineers, customer support group, and supply chain management. AEM is also a Gold Sponsor and the sole sponsor of the SEMICON University Program at SEMICON SEA 2022, scheduled this week in Penang.

 

Separately, with effect from Jul 1, Andre Andonian will join the board of AEM as an independent director. At McKinsey &amp; Company, Andonian serves as a member of the global board, senior partner for the Singapore office, chairman of Japan and the managing partner for Korea. Back on May 5, AEM reported its highest quarterly revenue in its history at S$261.9 million for Q1 2022 (ended Mar 31), a 226.4 per cent year-on-year increase, while upwardly revising its FY22 revenue guidance to between S$700 million and S$750 million.

 

Mapletree Industrial Trust 

 
Between Jun 10 and 13, Mapletree Industrial Trust Management non-executive director Chua Tiow Chye acquired 250,000 units of Mapletree Industrial Trust (MIT) at an average price of S$2.49 per unit.

 
With a consideration of S$621,382, this increased his deemed interest from 0.05 per cent to 0.06 per cent. It followed his acquisition of 200,000 units at S$2.49 per unit on Feb 7 and 200,000 units at S$2.60 per unit on Jan 26.

 
Chua is also the deputy group CEO of Mapletree Investments, the sponsor of MIT. He focuses on driving the sponsor’s strategic initiatives including expanding and directing the sponsor’s international real estate investments and developments. He also directly oversees the sponsor’s global lodging sector as well as the private capital management function.

 
For the FY22 (ended Mar 31), MIT reported its gross revenue and net property income increased 36.4 per cent and 34.5 per cent year on year to S$610.1 million and S$472.0 million respectively. MIT owns 141 properties, comprising 85 properties in Singapore and 56 properties in North America, which includes 13 data centres in North America held through the joint venture with the sponsor.

 Uni-Asia Group

 
On Jun 13, Uni-Asia Group executive chairman Michio Tanamoto acquired 150,000 shares of the company for a consideration of S$156,000. At an average price of S$1.04 per share, this increased his total interest in the company from 3.24 per cent to 3.44 per cent. This closely followed his acquisition of 50,000 shares at S$1.09 per share on Jun 9. Tanamoto was appointed the executive chairman of Uni-Asia Group in April 2020.

 The Straits Trading Company

 
On Jun 13, The Straits Trading Company independent and non-executive director Tan Tiong Cheng acquired 30,000 shares of the company for a consideration of S$90,300, at an average price of S$3.01 per share. This increased his direct interest in the conglomerate-investment company from 0.03 per cent to 0.04 per cent. He is also an independent and non-executive director of UOL Group, the lead independent director of Heeton Holdings, and a non-executive independent director of Amara Holdings.

 
The same session also saw Straits Trading Company independent and non-executive director Chua Tian Chu acquire 7,000 shares of the company at S$3.00 per share.

 
Chua last acquired shares in the company in March, and both directors acquired shares in the company in January. 

 GKE Corporation

 
On Jun 15, GKE Corporation executive director and CEO Neo Cheow Hui acquired 500,000 shares of the company, for a consideration of S$52,000 at 10.4 cents per share. This increased his total interest in the provider of integrated warehousing and logistics solutions from 3.60 per cent to 3.67 per cent.

 
Neo has extensive experience in the warehousing and logistics industry which has played a pivotal role in developing high level strategies for the group and making major corporate investments over the last 20 years.

 Hong Fok Corporation

 
On Jun 10, Hong Fok Corporation executive director and joint CEO Cheong Sim Eng acquired 43,000 shares of the company, for a consideration of S$41,925 at 98.0 cents per share. Cheong maintains a 20.27 total interest in the property developer.

 
He is principally involved in the group’s overall operations and management, with greater emphasis in Singapore and he has over 37 years of experience in the property development business.

 Grand Venture Technology

 
Between Jun 13 and 15, Grand Venture Technology executive chairman Ricky Lee Tiam Nam acquired 50,000 shares of the company at an average price of 76.8 cents per share. With a consideration of S$38,375, this increased his direct interest in the innovative precision manufacturer from 15.33 per cent to 15.34 per cent. 

 
Responsible for the overall strategic direction and development of the group, Lee was one of the founding directors of the company.

 
He has over 38 years of experience in the manufacturing, assembly/servicing and precision engineering industries, beginning his career in 1982 as a machinist in Pan-World Precision Engineering.

 
On Jun 15, GVT executive director and CEO Julian Ng Wai Yuen also acquired 10,000 shares at an average price of 76.5 cents per share. This increased his direct interest in the company from 3.54 per cent to 3.55 per cent. Ng has more than 20 years of experience in the manufacturing and precision engineering industries.

 
In early May, GVT reported 19.5 per cent year-on-year growth in Ebitda and 8.9 per cent growth in net profit after tax for Q1 FY2022 (ended Mar 31), on the back of a 41.0 per cent revenue increase from S$23.0 million in Q1 FY2021 to S$32.5 million in Q1 FY2022.

 
Lee noted with the results that robust demand from the semiconductor industry saw GVT make good progress in its discussions with potential customers engaged in the manufacture of metrology and inspection, etching, and wafer deposition equipment. Lee added that when fully onboarded, these customers are expected to be the key drivers for the front-end semiconductor activities of GVT in the near future. In Q1 FY2022, the semiconductor sector contributed 67.2 per cent to the group’s total revenue, comparable with the 71.1 per cent contribution in FY21 and 68.7 per cent contribution in 2020.

 Oxley Holdings

 
Between Jun 14 and 15, Oxley Holdings executive director and deputy CEO Eric Low See Ching acquired 100,000 shares of the company at 17.1 cents per share.

 
Low maintains a 28.13 per cent direct interest in the firm and is responsible for the operation of the group including sales and marketing, project development, business development and financial management. He also assists the CEO in charting and executing strategic plans.

 Inside Insights is a weekly column on The Business Times, read the original version.



Buybacks surge, Mapletree’s Chua Tiow Chye adds to MIT stake

<ul><li><a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745" rel="noopener">Straits Trading (STRTR SP)</a> acquires 2 freehold office buildings in Melbourne</li><li><a href="https://www.smartkarma.com/entities/first-sponsor-group-ltd" target="_blank" data-smartkarma-citation="entities:19779" rel="noopener">First Sponsor (FSG SP)</a> FY21 net profit up 18% YoY; Led by property development segment, hotels’ recovery underway in CN and EUR</li><li>SREIT ETFs picks up retail investors as net buy continues into 2022</li></ul>

Straits Trading (STRTR SP) acquires 2 freehold office buildings in MelbourneFirst Sponsor (FSG SP) FY21 net profit up 18% YoY; Led by property development segment, hotels’ recovery underway in CN and EURSREIT ETFs picks up retail investors as net buy continues into 2022

ASEAN Builder's Scoop (14Feb22) - STRTR Buys 2 Melbourne Offices

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Despite spending nearly three decades of his career in the real estate investment and management industry, Desmond Tang has yet to experience a dull day. 
That’s because the real estate industry has continued to prove its resilience amid disruptive trends. And Tang’s start-up experience - prior to leading Straits Real Estate (SRE), a wholly owned subsidiary of SGX-listed The Straits Trading Company - has come in handy. 
“Real estate is never boring,” said Tang, the Chief Executive Officer of SRE. “Despite its image as a traditional old-fashioned industry - a common parochial view - real estate is difficult to replace, even as economies evolve, and technology changes lives and businesses.” 
“People talk about modernising real estate, but the truth of matter is that it has never stopped adapting itself to new uses, new user requirements, and new occupier habits,” he added. 
“When an old trade like real estate juxtaposes with never-ending changes in space usage, it’s both captivating and invigorating. It’s very much like playing a 40-year-old original-pressed vinyl on a modern sound system, and being surprised by the outcome.” 
The 55-year-old, who holds a Bachelor of Science with Honours degree in Real Estate from the National University of Singapore, and a Master of Applied Finance degree from Macquarie University, has helmed SRE since February 2014. 
At various times prior to joining SRE, he was Managing Director and Co-Head at Alpha Investment Partners, and Managing Director at GrowthPath Capital, which he co-founded.  
“I’ve possibly had more involvement with start-up businesses than most real estate investment professionals,” Tang acknowledged. “Every start-up is an adventure, and every adventure requires a first step, as the Cheshire Cat in Alice of Wonderland says.” 
“But mostly, that first step is error-laden, so the ability to respond, adjust and change course often makes the difference between ultimate success and failure. When you participate in a start-up knowing the odds are at best even, you‘re driven to better your chances, create options and seek control of your own luck. My career experience would have been that much poorer without all of that.” 
Now at SRE, Tang is grateful for having had the opportunity to create and build the company from scratch into what it is today.  
“My previous experience with start-up companies certainly helped. Having been mostly a real estate fund manager prior to this role, it was necessary for me and my colleagues to decide early on how the investment style should be adapted for a publicly listed company like Straits Trading,” he recalled. 
“We also worked on delivering quick, tangible results to garner confidence from the market. We were fortunate to achieve what we planned quite quickly, kept our discipline, and continued to produce the goods over the years.” Growth Driver 
SRE was established as a private equity real estate investment company in 2013. Since then, it has grown to manage a diverse investment portfolio, with over S$2 billion in assets spanning China, Malaysia, Singapore, Japan, Australia and South Korea. Its portfolio includes logistics, retail, office and business park properties. 
SRE is an important earnings driver and growth engine for Straits Trading. The latter is a conglomerate-investment company with operations and financial interests in resources, property, and hospitality. 
These include majority or strategic stakes in the world’s third-largest tin producer, Malaysia Smelting Corporation, which is dual listed on Bursa Malaysia and SGX; ARA Asset Management and Far East Hospitality Holdings, as well as a diversified property portfolio and real estate investments that are wholly owned by the Group. 
In August 2021, Straits Trading announced it was selling its 19% stake in ARA Asset Management for S$1.14 billion to Hong Kong-listed ESR Cayman. 
For Tang, a key priority is ensuring that SRE remains relevant to its key stakeholders - namely its shareholders and employees - as it navigates the markets and takes advantage of business opportunities.  
“The alignment of interest between stakeholders is not always natural, so you must work on finding the balance that gives you sustainability,” he added. 
“I emphasise “work on” because you cannot leave that to chance. It requires conscious effort to ensure the company remains valid to shareholders and employees as environment and circumstances evolve.” 
In particular, SRE has been anticipating and keeping abreast of new trends following the onset of the pandemic. 
“COVID-19 brought about massive and swift changes in space usage habits that the industry could never have anticipated,” Tang noted. “Lockdowns, work-from-home regimes, exponential growth in online retailing, and safe-distancing requirements all contributed to the disruption.” 
“So we zeroed-in on opportunities that provide short- to mid-term insulation against current challenges, with asset quality to benefit from the eventual market recovery, such as new economy assets and business parks.” 
Looking ahead, SRE will continue to focus on building a portfolio of predominantly income-producing assets with stable cash flows. In the near term, it is looking to acquire business parks and warehouse retail parks in the UK, as well as logistics assets across key geographies.  
It has also ventured into greenfield developments in South Korea and Australia to reap development upside through build-to-suit opportunities, which are geared to fulfil secular, or longer term, demand. 
“We always focus on return maximisation by driving capital efficiency. This is reflected in SRE’s consistent ROE track record of 10% over the last five years,” Tang pointed out, referring to the key industry metric of return on equity. 
"We achieve this through a disciplined approach to capital allocation, risk pricing, asset management and divestment - all of which ensure capital is recycled into higher-returning investments in a systematic and timely manner. As part of our active asset management process, we also implement enhancement initiatives to improve the marketability and operational efficiency of these assets.” Burgeoning Potential 
In addition, the outlook remains bright in SRE’s key markets. South Korea offers enormous potential, driven by its rapidly emerging domestic e-commerce market and a supply shortfall in modern logistics assets, while in Japan, its real estate sector has emerged as one of the most resilient and best-performing property investment markets in the world amidst the pandemic.  
As for China, the quick containment of the pandemic and swift rebound in consumption has instilled confidence in domestic and foreign brands, which is set to spur further investment in the expansion of retail store networks in the country.  
Meanwhile, in Australia, a robust economy, continued expansion in e-commerce and infrastructure spending, coupled with a shortage of high-specification logistics space, continues to underpin growth. 
Despite such rosy prospects, challenges loom, not the least of which is how the pandemic has dramatically altered lives and livelihoods. 
“The current overriding concern, from the perspective of a real estate investment company, is how much of the changes in user habits that occurred during the pandemic are going to be permanent, and how much of that are temporary,” Tang said. 
“What can we do to our portfolio of properties to keep them relevant to users? What’s the impact on asset value if some of the pandemic-induced changes become permanent? Must new buildings be designed for a future pandemic that may or may not happen?” 
SRE is also competing with record amounts of private capital dry powder for deals - many investors are flush with cash and looking to deploy their funds.  
“There’s also a mismatch in price expectations between potential buyers and sellers,” he added. “The low interest-rate environment is a double-edged sword - there’s ample funding for investors, but also stronger holding and bargaining power for owners of distressed assets due to lower borrowing costs.” 
However, unlike conventional private equity funds, SRE is not constrained by a mandate. This gives the company the agility to allocate capital in the most efficient manner, allowing it to punch above its weight despite its relatively small size. 
“We have the advantage of being sector-agnostic, of being able to pursue opportunities that generate attractive risk-adjusted returns,” Tang added. 
“Our investment decisions are not only informed by our market outlook or the competitive landscape, but also the expected return on investment or invested capital, and our country-specific strategy.” 
 

The Straits Trading Company Ltd 
Incorporated in 1887, Straits Trading is a conglomerate-investment company with operations, as well as financial interests, in resources, property, and hospitality. These include majority or strategic stakes in Malaysia Smelting Corporation - the world’s third-largest tin producer that is dual-listed on Bursa Malaysia and SGX - ARA Asset Management, Far East Hospitality Holdings, as well as a diversified property portfolio and real estate investments that are wholly owned by the Group. In August 2021, Straits Trading announced it was selling its 19% stake in ARA Asset Management for S$1.14 billion to Hong Kong-listed ESR Cayman. 
The company website is: <a href="http://www.stc.com.sg">www.stc.com.sg</a> 
Click <a href="https://www.sgx.com/securities/equities/S20">here </a>for the company's StockFacts page. 
For the half year ended 30 June 2021 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/X9SCUY9SG97QHZ9Z/678773_STC%201H21%20PR_Release%20FINAL%20FOR%20SGX%2013.08.2021.pdf">here</a>. 
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="https://www.sgx.com/research-education/market-dialogues">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="https://www.sgx.com/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
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    SRE- CEO


Despite spending nearly three decades of his career in the real estate investment and management industry, Desmond Tang has yet to experience a dull day.  
That’s because the real estate industry has continued to prove its resilience amid disruptive trends. And Tang’s start-up experience - prior to leading Straits Real Estate (SRE), a wholly owned subsidiary of SGX-listed The Straits Trading Company - has come in handy.  
“Real estate is never boring,” said Tang, the Chief Executive Officer of SRE. “Despite its image as a traditional old-fashioned industry - a common parochial view - real estate is difficult to replace, even as economies evolve, and technology changes lives and businesses.”  
“People talk about modernising real estate, but the truth of matter is that it has never stopped adapting itself to new uses, new user requirements, and new occupier habits,” he added.  
“When an old trade like real estate juxtaposes with never-ending changes in space usage, it’s both captivating and invigorating. It’s very much like playing a 40-year-old original-pressed vinyl on a modern sound system, and being surprised by the outcome.”  
The 55-year-old, who holds a Bachelor of Science with Honours degree in Real Estate from the National University of Singapore, and a Master of Applied Finance degree from Macquarie University, has helmed SRE since February 2014.  
At various times prior to joining SRE, he was Managing Director and Co-Head at Alpha Investment Partners, and Managing Director at GrowthPath Capital, which he co-founded.   
“I’ve possibly had more involvement with start-up businesses than most real estate investment professionals,” Tang acknowledged. “Every start-up is an adventure, and every adventure requires a first step, as the Cheshire Cat in Alice of Wonderland says.”  
“But mostly, that first step is error-laden, so the ability to respond, adjust and change course often makes the difference between ultimate success and failure. When you participate in a start-up knowing the odds are at best even, you‘re driven to better your chances, create options and seek control of your own luck. My career experience would have been that much poorer without all of that.”  
Now at SRE, Tang is grateful for having had the opportunity to create and build the company from scratch into what it is today.   
“My previous experience with start-up companies certainly helped. Having been mostly a real estate fund manager prior to this role, it was necessary for me and my colleagues to decide early on how the investment style should be adapted for a publicly listed company like Straits Trading,” he recalled.  
“We also worked on delivering quick, tangible results to garner confidence from the market. We were fortunate to achieve what we planned quite quickly, kept our discipline, and continued to produce the goods over the years.”  Growth Driver  
SRE was established as a private equity real estate investment company in 2013. Since then, it has grown to manage a diverse investment portfolio, with over S$2 billion in assets spanning China, Malaysia, Singapore, Japan, Australia and South Korea. Its portfolio includes logistics, retail, office and business park properties.  
SRE is an important earnings driver and growth engine for Straits Trading. The latter is a conglomerate-investment company with operations and financial interests in resources, property, and hospitality.  
These include majority or strategic stakes in the world’s third-largest tin producer, Malaysia Smelting Corporation, which is dual listed on Bursa Malaysia and SGX; ARA Asset Management and Far East Hospitality Holdings, as well as a diversified property portfolio and real estate investments that are wholly owned by the Group.  
In August 2021, Straits Trading announced it was selling its 19% stake in ARA Asset Management for S$1.14 billion to Hong Kong-listed ESR Cayman.  
For Tang, a key priority is ensuring that SRE remains relevant to its key stakeholders - namely its shareholders and employees - as it navigates the markets and takes advantage of business opportunities.   
“The alignment of interest between stakeholders is not always natural, so you must work on finding the balance that gives you sustainability,” he added.  
“I emphasise “work on” because you cannot leave that to chance. It requires conscious effort to ensure the company remains valid to shareholders and employees as environment and circumstances evolve.”  
In particular, SRE has been anticipating and keeping abreast of new trends following the onset of the pandemic.  
“COVID-19 brought about massive and swift changes in space usage habits that the industry could never have anticipated,” Tang noted. “Lockdowns, work-from-home regimes, exponential growth in online retailing, and safe-distancing requirements all contributed to the disruption.”  
“So we zeroed-in on opportunities that provide short- to mid-term insulation against current challenges, with asset quality to benefit from the eventual market recovery, such as new economy assets and business parks.”  
Looking ahead, SRE will continue to focus on building a portfolio of predominantly income-producing assets with stable cash flows. In the near term, it is looking to acquire business parks and warehouse retail parks in the UK, as well as logistics assets across key geographies.   
It has also ventured into greenfield developments in South Korea and Australia to reap development upside through build-to-suit opportunities, which are geared to fulfil secular, or longer term, demand.  
“We always focus on return maximisation by driving capital efficiency. This is reflected in SRE’s consistent ROE track record of 10% over the last five years,” Tang pointed out, referring to the key industry metric of return on equity.  
"We achieve this through a disciplined approach to capital allocation, risk pricing, asset management and divestment - all of which ensure capital is recycled into higher-returning investments in a systematic and timely manner. As part of our active asset management process, we also implement enhancement initiatives to improve the marketability and operational efficiency of these assets.”  Burgeoning Potential  
In addition, the outlook remains bright in SRE’s key markets. South Korea offers enormous potential, driven by its rapidly emerging domestic e-commerce market and a supply shortfall in modern logistics assets, while in Japan, its real estate sector has emerged as one of the most resilient and best-performing property investment markets in the world amidst the pandemic.   
As for China, the quick containment of the pandemic and swift rebound in consumption has instilled confidence in domestic and foreign brands, which is set to spur further investment in the expansion of retail store networks in the country.   
Meanwhile, in Australia, a robust economy, continued expansion in e-commerce and infrastructure spending, coupled with a shortage of high-specification logistics space, continues to underpin growth.  
Despite such rosy prospects, challenges loom, not the least of which is how the pandemic has dramatically altered lives and livelihoods.  
“The current overriding concern, from the perspective of a real estate investment company, is how much of the changes in user habits that occurred during the pandemic are going to be permanent, and how much of that are temporary,” Tang said.  
“What can we do to our portfolio of properties to keep them relevant to users? What’s the impact on asset value if some of the pandemic-induced changes become permanent? Must new buildings be designed for a future pandemic that may or may not happen?”  
SRE is also competing with record amounts of private capital dry powder for deals - many investors are flush with cash and looking to deploy their funds.   
“There’s also a mismatch in price expectations between potential buyers and sellers,” he added. “The low interest-rate environment is a double-edged sword - there’s ample funding for investors, but also stronger holding and bargaining power for owners of distressed assets due to lower borrowing costs.”  
However, unlike conventional private equity funds, SRE is not constrained by a mandate. This gives the company the agility to allocate capital in the most efficient manner, allowing it to punch above its weight despite its relatively small size.  
“We have the advantage of being sector-agnostic, of being able to pursue opportunities that generate attractive risk-adjusted returns,” Tang added.  
“Our investment decisions are not only informed by our market outlook or the competitive landscape, but also the expected return on investment or invested capital, and our country-specific strategy.” 
 

The Straits Trading Company Ltd  
Incorporated in 1887, Straits Trading is a conglomerate-investment company with operations, as well as financial interests, in resources, property, and hospitality. These include majority or strategic stakes in Malaysia Smelting Corporation - the world’s third-largest tin producer that is dual-listed on Bursa Malaysia and SGX - ARA Asset Management, Far East Hospitality Holdings, as well as a diversified property portfolio and real estate investments that are wholly owned by the Group. In August 2021, Straits Trading announced it was selling its 19% stake in ARA Asset Management for S$1.14 billion to Hong Kong-listed ESR Cayman.  
The company website is: www.stc.com.sg  
Click here for the company's StockFacts page.  
For the half year ended 30 June 2021 financial results, click here.  
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Straits Trading Revs Up Real Estate Growth Engine

Singapore

Straits Trading Company Limited operates as an investment holding company that positions its investments in real estate, hospitality, resources and other investments in the Asia Pacific region. The Company is also engaged in tin mining and smelting through its subsidiary.

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