Asean conglomerates do better than those in the West: study

June 18, 2014 Leave a comment

PUBLISHED JUNE 13, 2014

Asian conglomerates do better than those in the West: study

Robust international strategies become critical as their economies mature

MICHELLE QUAH

MICHQUAH@SPH.COM.SG   @MichelleQuahBT

Conglomerates in Asia are more successful than most of their Western counterparts, defying conventional wisdom that such entities are anachronistic in the current business landscape and are ripe for break-up – PHOTO: SPH

[SINGAPORE] Conglomerates in Asia are more successful than most of their Western counterparts, defying conventional wisdom that such entities are anachronistic in the current business landscape and are ripe for break-up.

A new study by American global management consulting firm Bain & Company, titled Who Says Dinosaurs Can’t Dance: Why conglomerates thrive in South-east Asia, has found that these Asian giants are:

  • Continuing to dominate the corporate landscape, accounting for more than a fifth of the top-listed stocks in their countries;
  • Outperforming their more focused counterparts in the same markets, and consistently delivering higher shareholder returns; and
  • Achieving a “conglomerate premium”, that is, trading at a premium to their sum-of-the-parts, which only very few Western conglomerates manage to do.

For the study, Bain & Company examined 49 large, publicly-listed conglomerates in Indonesia, Malaysia, the Philippines, Singapore and Vietnam over the last 10 years.

Their sample covered both family and state-controlled groups and included the likes of Sime Darby and Boustead Holdings in Malaysia, Keppel Corp and SembCorp Industries in Singapore, Siam Cement Group in Thailand, Astra and Indofood in Indonesia, and the Ayala Group in the Philippines.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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