All elements in place for Straits Trading to take flight

CHEW Gek Khim, chief executive officer of The Straits Trading Company Limited, once likened the setting up of new growth platforms in real estate, fund management and hospitality as designing a new engine that could run optimally. This engine has started running full steam at the 130-year-old company, generating strong recurring income for the group.

One of its crown jewel assets is a 20.95 per cent stake in ARA Asset Management (ARA), whose growth prospects have been bolstered by the entry of Warburg Pincus and China's AVIC Trust as key shareholders. Since ARA's delisting from the Singapore bourse in April, Straits Trading has become the only listed proxy with exposure to one of the largest real estate fund managers in the region with assets under management of S$35.6 billion as at Dec 31, 2016.

But with Straits Trading still trading at a stark 31 per cent discount to net asset value, one can only conclude that investors have not fully appreciated the transformation of a venerable company whose history dates back to Singapore's colonial era.