AFTER 2 turbulent years of the pandemic, companies have been eager to return to more typical operating conditions.
But alas, the global economy continues to be challenged in 2022 by high inflation, rising interest rates and energy costs, and geopolitical tensions.
Amid these macroeconomic uncertainties, the 3 Best Chief Financial Officer (CFO) awardees of the Singapore Corporate Awards 2022, tell The Business Times that capital management discipline, a strong balance sheet and healthy cash lines, as well as a productive and diverse workforce, will help their companies tide through these challenges.
Making strategic investments
Andrew Lim, group chief financial officer for real estate investment manager CapitaLand Investment, said that while real estate is traditionally seen as a hedge against inflation, the rising cost of capital also necessitates a more deliberate approach to underwriting any new investments, which has affected the pace of deal-making.
The manager aims to scale its funds under management and fee-related earnings through fund management, lodging management and its full stack of operating capabilities, underpinned by a well-diversified investment portfolio across asset classes and international capital partners.
Lim was named best CFO in the category for companies with over S$1 billion in market capitalisation. Eve Chan from Metro Holdings was the awardee for companies with between S$300 million and S$1 billion in market capitalisation, while Yeo Swee Cheng from LHN was the awardee for companies with under S$300 million in market capitalisation.
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All 3 companies have some operations in real estate.
The reopening of most economies around the world has boosted retail and workspace recovery, Lim said, noting that demand and rents are continuing to recover in CapitaLand's offices, business parks, industrial and logistics portfolio.
The company remains "cautiously optimistic" on the China market, he added.
"With the ongoing correction of the real estate market, we see the long-term potential to tap the Chinese market's liquidity for scaling our investment management platform," he said.
Metro's Chan said the group has over the years diversified its portfolio into "defensive asset classes", such as co-investing in industrial and logistics properties as well as purpose-built student accommodation.
Many such strategic investments happened during the pandemic, Chan said.
With a strong balance sheet and healthy free-cash and resources, relatively low debt-equity ratio and unutilised banking lines, the group is in a good position to navigate the current period of heightened uncertainty, and still be able to capitalise on attractive investment opportunities that arise, she said.
On the real estate front, LHN is placing its bets on the co-living trend. During the pandemic, the group acquired more such properties, in an effort to grow Coliwoo, its co-living brand.
Delays in home renovation due to the manpower crunch is expected to further drive up demand for co-living spaces, along with the pick-up in the global travel market, Yeo said.
Fostering a productive and diverse workforce
The shortage of skilled manpower remains one of the biggest challenges for LHN, which is primarily a logistics and facilities services provider.
"As the economy bounces back quickly with competition for skilled manpower becoming more intense, we are looking to spend more effort and costs to hire new talent while retaining our existing skilled staff to mitigate this issue," Yeo said.
The use of digitalised and automated solutions has helped foster a more productive and efficient workforce, while retaining work quality and customers' satisfaction, she noted.
For instance, queries for its space optimisation business are now managed entirely online. The use of cleaning robots has also reduced the physical demands on employees, allowing them to focus on more value-added tasks or on upgrading their skills.
CapitaLand Investment's Lim said having talented, diverse people on the ground with the right values and experience to build and drive its business is one of the biggest challenges to scaling globally.
"So we take great efforts in recruiting good people worldwide, integrating them into the company, and investing in grooming talent from within to build a pipeline of capable leaders to steer our global business as we move forward," he said.
Outlook for the year ahead
CapitaLand Investment's priority for the next 12 months is to grow fee income from its listed funds and private vehicles, and lodging management.
It is also looking to strengthen its fundraising network in China, to complement the overall expansion of its network across Asia, Europe, and North America, Lim said.
"Our teams on the ground around the world will continue actively seeking attractive opportunities to further diversify our portfolio across product lines, geographies and asset classes to ensure income stability for our investors," he said.
Like Lim, Chan maintains a positive view on the medium-to-long term prospects on the Chinese market, where Metro predominantly operates.
On the property front, Metro will continue to look for accretive investments and work with strategic partners in the group's core markets.
On the retail front, it will continue to enhance its merchandise mix through collaborations with local and international business partners. The group is also growing its emphasis on e-commerce, and has partnered with platforms like Shopee and Lazada to better engage with digital consumers.
LHN is also looking to introduce new services in its Work+Store business, with the growth in e-commerce activities. Over the years, this subsidiary business has already evolved from offering self-storage space to a fulfilment hub for warehousing logistics and workspace.
Apart from being bullish on its co-living business, the group is expecting a rebound in leasing demand in its space optimisation business and an increase in demand for parking spaces for its car park business.
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