Quick takes: Listed firms seek to unlock value amid disruption

WITH few signs of Covid-19 and its economic impacts abating in the near term, a number of publicly-listed entities in Singapore are re-looking their business strategies and exploring new opportunities to unlock value for both companies and their shareholders.

Here are six of the most recent Singapore Exchange-listed (SGX-listed) entities to join the value-creation fray.

Singtel: On the same day it reported a 92.7 per cent year-on-year decline in H2 net profit to S$87.6 million, the telco announced a strategic reset that includes unlocking the value of its infrastructure asset portfolio which consists of towers, satellites, subsea cables and data centres. In a filing on Thursday morning, Singtel said it has already begun a partial sale via auction of Optus' towers in Australia to maximise proceeds from the sale, adding that the group seeks to "more actively recycle" its assets.

Other aspects of the group's new strategic direction include plans to leverage its 5G leadership to reinvigorate its core consumer and enterprise businesses, and develop new growth engines in ICT (information and communications technology) and digital services.

Sembcorp Industries: The group aims to grow profit contribution from its sustainable solutions portfolio from a current 40 per cent to 70 per cent by 2025, as part of the group's new strategic plan to "transform its portfolio from brown to green". Unveiling its new transformation plan on Thursday morning, Sembcorp said growth of the portfolio will be driven by the group's renewables and integrated urban solutions business.

It also targets to achieve a compounded annual growth rate (CAGR) of 30 per cent for its renewable energy portfolio by 2025, and a CAGR of 10 per cent for its integrated urban solutions portfolio. Sembcorp Industries group president and chief executive Wong Kim Yin said he hopes the new strategy will position the group as a "leading pan-Asian provider of sustainable solutions".

ComfortDelGro (CDG): The transport operator is exploring options to unlock the value of its Australian assets, which could take a variety of forms including a partial sale of assets or an initial public offering. This was announced on Wednesday after the group posted a 56.1 per cent rise in first-quarter net profit S$56.2 million.

For the year ended Dec 31, 2020, the Australian businesses chalked up a revenue of S$608 million, making it the best-performing overseas market. CDG said it now operates in six states and territories in Australia, where it is one of the largest privately-owned bus operators.

Singapore Press Holdings (SPH): The group, which publishes The Business Times, on May 6 proposed to transfer its entire media-related business to a newly-incorporated wholly-owned subsidiary, SPH Media Holdings. SPH Media will eventually be transferred to a new public company limited by guarantee (CLG). Unlike companies, CLGs do not have share capital or shareholders.

Under the new structure, profits from the media business will be reinvested into media operations rather than distributed to shareholders. This will free the media business from the "expectations of shareholders for a fair financial return and regular dividends", said SPH chairman Lee Boon Yang on the day of the announcement.

CapitaLand: The real estate behemoth is looking to overhaul its structure in a bid to sharpen its focus on strategic growth and create shareholder value. On March 22 this year, CapitaLand proposed to place its real estate development business under private ownership.

Its investment management platforms and lodging arm will be consolidated into a newly-created entity CapitaLand Investment Management (CLIM), which aims to list on the SGX. This new entity is expected to be asset-light and scalable, will drive growth in fee income and funds under management, as well as spur higher capital productivity, efficiency and returns.

Keppel Corporation: Earlier this year the group announced plans to restructure its subsidiary Keppel Offshore & Marine (Keppel O&M) into a slimmer, more asset-light one. On Jan 28 the group said it intended for Keppel O&M to exit the offshore rig building business after completing existing rigs under construction. The group said that the move to transform its O&M business reflects its "commitment to sustainability and climate change".

Keppel's FY2020 results were announced on the same day, with H2 net profit declining 91.1 per cent on-year to S$31.3 million. Its O&M arm notably bore the biggest brunt from the downturn, with impairments of S$952 million attributed mainly to the segment.

Unlocking Value

Action Aim Singtel A strategic reset, comprising: - Exploring options to unlock value of the group's infrastructure asset portfolio - Leverage its 5G leadership to reinvigorate its core consumer and enterprise businesses - Develop new growth engines in ICT (information and communications technology) and digital services Capture untapped digital growth in the 5G era, sharpen the group's focus and improve shareholder value Sembcorp Industries Announced new strategic plan which includes growing profit contribution from its sustainable solutions portfolio to 70% by 2025, from 40% currently To "transform its portfolio from brown to green" ComfortDelGro (CDG) Exploring options to unlock the value of its Australian assets, which could take a variety of forms including a partial sale of assets or an initial public offering Unlock value for shareholders as well as invest in new technologies including electrification Singapore Press Holdings (SPH) Transferring media business into newly-incorporated subsidiary SPH Media Holdings, which will eventually be transferred to a new public company limited by guarantee (CLG) Free the media business from the expectations of shareholders for a fair financial return and regular dividends. Unlike companies, CLGs do not have share capital or shareholders CapitaLand Placing real estate development business under private ownership; Investment management platforms & lodging arm will be consolidated into CapitaLand Investment Management (CLIM), which is to be listed Pivot the CapitaLand group towards an asset-light and fee-income driven business Keppel Corporation Restructuring Keppel Offshore & Marine into a slimmer, more asset-light company An asset-light strategy and create value with the surplus funds unlocked