Here’s why some of Singapore’s stellar behemoth firms have recently grown lacklustre

CapitaLand and SGX are on top of the list.

Some of Singapore’s giant stellar companies have lately become less nimble and slow to grow because of their size.

According to a report by RHB Research, two examples include CapitaLand and the local bourse, the Singapore Exchange.

“If you look at CapitaLand, its shareholders equity has grown at a 10-year CAGR of 8.9% pa but net profit growth during the same period was just 0.5% pa. ROEs have also been below par at 5-7% over the last four years compared to the 10-year average of 11%,” the report noted.

The report added that some of the key reasons why these companies are slowing down include weak economic conditions, policy regulations and increased competition in core operating markets, which have constrained acquisition potential and squeezed margins.

Meanwhile, in the SGX’s case, its securities average daily value (SADV) used to be trading with a high turnover but has been lacklustre over the past few months, with July and August SADV hovering only around SGD1b, according to the report.

“SGX has also been trying hard to source for new company listings, but with little success, and is increasingly reliant on its derivative business instead of its core securities business,” the report added.

Despite this, RHB noted that both companies have been eager to find new engines of growth.

“CapitaLand [has been] putting more emphasis on its service residence business - Ascott, and SGX [is] looking at M&A opportunities with the impending acquisition of the Baltic Exchange,” the report said.