Yahoo Finance 3 Singapore Companies That Are Growing Their Businesses: Will Their Share Prices Follow?
Companies can grow their businesses using a variety of methods.
One is to expand their manufacturing facility to produce more goods to cater to rising demand.
Another is to collaborate with reputable partners to expand their presence and increase their customer base.
Yet another method is to conduct acquisitions or mergers to augment their capabilities by adding a new business segment.
Investors do need to remember, however, that all business development initiatives require a gestation period.
Time is needed for these moves to show results and be reflected in the company’s top and bottom lines.
But should the business demonstrate a sustainable rise in profits and cash flows, its share prices should follow suit.
Here are three Singapore companies that recently announced business development efforts.
SIA Engineering Co Ltd (SGX: S59)
SIA Engineering, or SIAEC, is a provider of aircraft maintenance, repair and overhaul (MRO) services.
The group has a client base of more than 80 international airlines and aerospace equipment manufacturers and provides line maintenance services in more than 25 airports in seven countries.
Last week, SIAEC announced that it signed an agreement with Eaton (NYSE: ETN) to form an MRO joint venture (JV).
Eaton is a provider of hydraulic, fuel, oxygen and other solutions including aftermarket service and support for military and commercial aircraft globally.
Eaton will hold a 51% stake in the JV with SIAEC holding the remainder, with the initial paid-up capital being US$16 million.
This JV will inspect, test, repair, modify, and overhaul Eaton-manufactured aircraft components that are installed on the airframe and engine fuel and hydraulics systems.
Both parties will build up their customer base through the formation of this JV.
CEO Ng Chin Hwee is optimistic about this JV as he sees it as an important platform for the group to build capabilities on new-generation aircraft.
It will also help to complement SIAEC’s existing portfolio of JVs with other original equipment manufacturers.
Grand Banks Yachts (SGX: G50)
Grand Banks Yachts, or GBY, is a manufacturer of luxury recreational motor yachts.
The group produces the yachts under the Grand Banks, Palm Beach and Eastbay brands at its Pasir Gudang yard in Malaysia and owns two service yards in the US and Australia.
GBY announced the expansion of its production facility in Malaysia by more than 25% to handle larger luxury boats.
This expansion will cost around S$9 million and enable the group to increase capacity and accelerate its boat-building capabilities.
The upgrade is slated to be completed by August 2024.
An additional 13,313 square metres of space will be added to its yard, lifting the total to nearly 65,000 square metres.
This expansion will also help to ramp up boat construction and improve delivery times as demand for yachts has risen since the pandemic.
The upgrade will be financed via a mix of internal funds and bank borrowings.
ComfortDelGro Corporation Ltd (SGX: C52)
ComfortDelGro Corporation, or CDG, is a land transport company with a total fleet size of around 34,000 buses, taxis, and rental vehicles.
The group also runs 177 km of light and heavy rail networks in Singapore and New Zealand and has a presence in five other countries.
CDG has entered a strategic partnership with Guangzhou Public Transport Group to develop and promote transport-related green energy business.
The two companies will collaborate to invest, build, and operate green energy projects.
These include investments in the construction of automotive electric charging and swapping stations along with solar photovoltaic and energy storage systems to support the infrastructure.
A joint project to deliver 60 chargers to municipal buses and cars in Guangzhou, China, will count as the partnership’s initial project.
Elsewhere, CDG has been awarded a A$200 million outer metropolitan bus contract in New South Wales (NSW).
The latest win follows up on CDG’s three other successful tenders for bus contracts in Australia that are worth more than A$1.9 billion.
This latest contract will commence in July 2024 and run for eight years.
It has been awarded by the NSW government to Red Bus CDC NSW, a 50:50 JV between CDC NSW, a subsidiary of CDG, and Red Bus Services.
Red Bus Services is an established NSW bus operator with more than 80 years of experience and has teamed up with CDG to serve more than two million passengers expected each year.
After snagging this contract, Australia now represents the group’s largest overseas investment destination at S$1.2 billion to date.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
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