For the first time since the inception of The Edge Billion Ringgit Club (BRC) 11 years ago, the much-anticipated annual gala dinner to honour Corporate Malaysia’s crème de la crème could not be held due to the ongoing Conditional Movement Control Order in Kuala Lumpur and Selangor to once again flatten the Covid-19 curve.
Nonetheless, to spur Corporate Malaysia on during the current rough patch, a total of 48 corporate awards were still presented to 35 companies based on their financial performance from FY2016 to FY2019.
After all, we started the awards in 2010 with the aim of encouraging Malaysian companies to be even better at what they do, and to grow, invest and create jobs as well as be socially responsible. It is hoped that, in turn, they will inspire others to excel. The message that Corporate Malaysia is resilient and can strive on is all the more important during this time.
This year, based on the June 30, 2020, cut-off date, there were 161 companies listed on Bursa Malaysia with a market capitalisation of RM1 billion or more. This is down from 168 companies last year. The all-time high was 185 in 2011.
The total market cap of the 161 companies was also lower year on year at RM1.41 trillion versus RM1.55 trillion last year.
Still, the members’ combined market cap continues to make up over 90% of the total market cap of Bursa Malaysia as at June 30, 2020. This shows that BRC members are truly the strongest in Corporate Malaysia.
The combined pre-tax profit of BRC 2020 members was RM107.7 billion in financial year 2019 (FY2019) — up 8.2% from RM99.5 billion in FY2018 — while the collective net profit was RM80.78 billion, up 10.6% from RM70.73 billion in FY2018.
BRC members continue to be major taxpayers, paying an estimated RM26.9 billion in taxes for FY2019 — more than 40% of the government’s annual estimated corporate income tax collection.
Of the 11 companies chosen as Company of The Year since our inaugural awards in 2010, five continue to outperform the FBM KLCI in terms of total shareholders’ return since they won the award.
We presented sectoral awards based on three financial performance measures:
For the Company of the Year, we used a matrix of financial performance in the three categories and corporate responsibility initiatives on a weighted basis:
Weight to total score:
Due to restrictions because of Covid-19 this year, we have had to remove the corporate responsibility (CR) portion of the award, with the marks reallocated to the quantitative criteria.
Going forward, companies must take note that it is not just about making profits but, increasingly, also about making profits responsibly. Due consideration must be given to all stakeholders in the community and not only company shareholders.
The Company of the Year for 2020 went to Hartalega Holdings Bhd, whose market cap currently stands at close to RM50 billion, the sixth-largest stock on Bursa Malaysia. The director-general of the Labour Department was recently reported as saying that Hartalega was exemplary in its provision of accommodation for its workers.
We did not give out a Value Creator: Malaysia’s Outstanding CEO award this year, as in the case for 2011 and 2015. We hope to continue to do so under better circumstances.
The success of BRC as the benchmark awards for Corporate Malaysia would not be possible without the support of our partners. I thank OCBC and Mercedes-Benz for their steadfast support. We hope this prestigious annual gathering will continue to be Corporate Malaysia’s most anticipated corporate awards ceremony as the world recovers from the pandemic.
Congratulations to all the winners and members of BRC 2020. Stay resilient, make profits and do good!
Datuk Ho Kay Tat
Publisher & Group CEO
The Edge Media Group
The Covid-19 pandemic has changed the way people work, interact and celebrate key events. This year, The Edge Media Group and its partners are celebrating Corporate Malaysia’s best-performing companies at the 11th annual The Edge Billion Ringgit Club (BRC) Awards — sans the prestigious gala awards dinner for the first time, owing to the ongoing Conditional Movement Control Order (CMCO) in the Klang Valley.
Tough times are indeed here. At 161, the number of The Edge BRC members — companies listed on Bursa Malaysia with a market capitalisation of RM1 billion or more — is the lowest in five years. That is based on the end-June membership cut-off date, a change from our usual end-March cut-off, owing to the Covid-19 pandemic.
Not only is the pool of billion-ringgit companies smaller, but their combined market cap of RM1.41 trillion as at end-June was below the RM1.55 trillion of the 168 members as at end-March last year. The 9.3% year-on-year decline was steeper than the 8.3% decline seen last year. A y-o-y decline in collective market value was seen in 2015 and 2016, but this year’s fall is the largest since the awards began in 2010 (see membership statistics table on Page 8).
Yet, there is no denying the significance of this elite group of companies. This year’s 161 BRC members’ combined market cap constituted 90.8% of the total market cap of companies on Bursa Malaysia as at end-March.
BRC 2020 members’ collective pre-tax profit was RM107.7 billion in FY2019, up 8.2% from the RM99.5 billion they made in FY2018. Collective net profit was RM80.78 billion in FY2019, up 10.6% from RM73.03 billion in FY2018, an improvement over figures seen during last year’s awards. Last year’s 168 members booked RM101.31 billion in pre-tax profit in FY2018, down 12.4% from RM115.6 billion in FY2017, while net profit declined 13.2% to RM73.37 billion in FY2018 from RM84.5 billion in FY2017. It remains to be seen how many have been able to sustain the improved performance this year in the face of the pandemic.
BRC members continue to be major taxpayers, paying an estimated RM26.9 billion in taxes in FY2019, compared with RM26.04 billion in taxes by the previous year’s 168 members in FY2018. This continues to be more than 40% of the government’s annual estimated corporate income tax collection.
It is also worth noting that four of the 10 companies chosen as The Edge BRC Company of the Year since our inaugural awards in 2010 continue to outperform the bellwether FBM KLCI and the broader FBM EMAS Index in terms of total shareholder returns since they were named Company of the Year. The best performing was Supermax Corp Bhd (2010 winner), followed by QL Resources (2011 winner), Nestlé (Malaysia) Bhd (2016 winner) and Press Metal Aluminium Holdings Bhd.
This year’s Company of the Year, Hartalega Holdings Bhd, was also outperforming both indices, measured from the start of this year through Dec 7, Bloomberg data shows (see table).
Tellingly, two of the top three best-performing stocks among the past and present winners of the Company of the Year award were glove makers Supermax and Hartalega.
Supermax, The Edge Billion Ringgit Club’s first Company of the Year, recorded spectacular gains in 2020. It will replace KLCCP Stapled Group as a constituent of the FBM KLCI on Dec 21, Bursa Malaysia said on Dec 3 following a semi-annual review of the FTSE Bursa Malaysia Index Series.
Even before this piece of good news was announced, the jump in demand for rubber gloves amid the pandemic had already caused a phenomenal rise in Supermax’s share price and earnings. At the start of the year, the company’s market capitalisation was just RM1.81 billion, down 18% from RM2.28 billion at end-2018.
However, the more than 1,000% year-to-date gain in its share price to RM7.70 as at Dec 7 pushed its market cap to RM20.2 billion. At their peak, the shares had closed as high as RM11.63 on Aug 6 to give it a market valuation of RM30.71 billion. If that share price level had been sustained until today, Supermax would have joined the ranks of the country’s top 20 largest listed companies. It was at No 25 on Dec 7.
There are analysts who believe Supermax should be worth a lot more — all 11 analysts covering the stock call it a “buy”, with target prices of between RM9.36 and RM16.04, according to Bloomberg data. If its shares rise to RM16.04, the company would be valued at over RM42 billion — more than the approximately RM39 billion market cap (as at Dec 7) of Hong Leong Bank Bhd, CIMB Group Holdings Bhd or Maxis Bhd.
Coming in at No 6 is Hartalega, with a market cap of RM49.5 billion as its shares closed at RM14.14 on Dec 7. This makes it smaller than only Malayan Banking Bhd (RM92.97 billion), Public Bank Bhd (RM72.2 billion), Tenaga Nasional Bhd (RM62.18 billion), Petronas Chemicals Group Bhd (RM60.8 billion) and Top Glove Corp Bhd (RM52.92 billion) — and much larger than many traditional blue chips.
At the peak of the euphoria over glove makers this year, Hartalega’s market cap stood at RM70.3 billion, as its shares closed at RM20.42 on Aug 3. At one point, it was the country’s third largest stock, overtaking even Public Bank, which is deemed among the bluest of the blue chips.
At the time of writing, as many as 15 analysts still had a “buy” call on Hartalega, with target prices ranging from RM20.60 to RM27.10, Bloomberg data shows. No analyst has dared to say “sell” just yet while six have a “hold” recommendation on the stock, with target prices between RM14.78 and RM19.50.
Going by the most bullish of analyst target prices for Hartalega of RM27.10, its market cap could reach RM92.9 billion — just a shade below Maybank’s market cap of RM92.97 billion as at Dec 7. If Hartalega can sustainably deliver the kind of earnings growth that analysts believe it can and indicates that it will gradually increase its dividend payout rate, investors chasing yield in the current low-yield environment may just shore up its share price to where analysts hope it will go.
At the time of writing, the second best-performing Company of the Year is QL Resources. When it was named The Edge BRC’s Company of the Year in 2011, its market cap was only RM2.5 billion as at end-2011. It took four years to double its market value to RM5.4 billion as at end-2015, and just another two years to double it again to RM11 billion. By end-2019, its market cap stood at RM13.2 billion.
QL shares closed at RM6.12 on Dec 7, giving it a market cap of RM14.9 billion, below the RM16.4 billion on May 29 when it closed at RM6.72 apiece.
Analysts are not as bullish on QL relative to those covering the two glove makers though — only two have “buy” calls, versus eight “hold” and four “sell” recommendations. One reason may be the uncertainties surrounding the retail sector and the speed at which consumer spending and the economy can recover. QL’s Family Mart venture, for instance, was doing well before the pandemic hit.
It should be interesting to see how these stocks perform next year, one year after Covid-19 caused the world to go into various stages of lockdown.
Nestlé — The Edge BRC’s Company of the Year in 2016 — is the only company to have made it to The Edge BRC Top 25 list every year since the awards’ inception in 2010.
Carlsberg Brewery Malaysia Bhd is the only company to have made it to The Edge BRC Top 25 list in 10 of the 11 years. It did not make the cut in 2010 but has been among the best every year over the past decade.
DiGi.Com Bhd — The Edge BRC’s Company of the Year in 2013 — appeared on The Edge BRC Top 25 list in nine of the 11 years. The exceptions were 2019 and this year.
Dialog Group Bhd made it to the BRC top 25 list eight times out of 11, with the exceptions being 2015 to 2017.
Meanwhile, Dutch Lady Milk Industries (M) Bhd — The Edge BRC’s Company of the Year in 2014 — and Hartalega Holdings — The Edge BRC’s Company of the Year this year — are among six companies that have made the Top 25 list six times. The rest are Aeon Credit Service (M) Bhd, Syarikat Takaful Malaysia Keluarga Bhd, Top Glove Corp Bhd and Public Bank Bhd.
Five companies made the cut five times out of 11. They are QL Resources (The Edge BRC’s Company of the Year in 2011), British American Tobacco (M) Bhd, Guinness Anchor Bhd, Hap Seng Consolidated Bhd and United Plantations Bhd.
Eleven companies made the Top 25 list four times over the past 11 years. They are AirAsia Bhd, CIMB Group Holdings Bhd, Fraser & Neave Holdings Bhd, Heineken Malaysia Bhd, Kossan Rubber Industries Bhd, KPJ Healthcare Bhd, Kuala Lumpur Kepong Bhd, Malayan Banking Bhd, Malaysia Building Society Bhd, Scientex Bhd and Tenaga Nasional Bhd (The Edge BRC’s Company of the Year in 2015).
The 11 companies that made the Top 25 list three times over the 11 years include 2019’s Company of the Year Press Metal Aluminium Holdings Bhd, 2018’s Company of the Year Petronas Dagangan Bhd and 2010’s Company of the Year Supermax. The other eight are Astro Malaysia Holdings Bhd, Cahya Mata Sarawak Bhd, Guan Chong Bhd, Inari Amertron Bhd, Mudajaya Group Bhd, MyEG Services Bhd, Tradewinds (M) Bhd and UEM Edgenta Bhd.
If they continue to do well, some of these names could be the next Company of the Year.
The Edge BRC recognises excellence in companies with a market cap of at least RM1 billion. The billion-ringgit cut-off point serves as an aspirational target for dynamic smaller companies. Companies are added to the annual list automatically at the cut-off date and are evaluated on growth in profit, returns to shareholders and corporate responsibility (CR) commitments, among others. The award methodology is transparent and the results are audited by Deloitte Malaysia Bhd.
OCBC Bank (Malaysia) Bhd, a key partner since the awards’ inauguration in 2010, returns as the main sponsor for the 11th year. Mercedes-Benz is the official car.
Datuk Ong Eng Bin, CEO of OCBC Bank Malaysia, says the 11th year of the bank’s collaboration with The Edge takes on greater significance against the backdrop of these challenging times amid Covid-19.
“Despite the environment caused by the pandemic, Corporate Malaysia has continued with its sustainable initiatives. Climate change and social justice realities call for organisations big and small to embrace ESG (environmental, social and governance) practices even more wholeheartedly in all they do,” Ong said.
“Uncertainty was already the new normal before Covid-19 struck but, as many BRC members have consistently proved in the past decade, when the going gets tough, the tough get going,” says Ho Kay Tat, The Edge Media Group publisher and group CEO. “It is when the tide goes out that we know which companies look good only on the surface and see with renewed conviction the ones that are resilient and built to last,” Ho adds, reiterating the importance of celebrating corporate excellence and good governance to spur Corporate Malaysia on. “This is a marathon. Strive on Corporate Malaysia, strive on.”
Looking ahead, Ho says companies “must take note that it’s not just about making profits but increasingly about making profits responsibly. Due consideration must be given to all stakeholders in the community and not only company shareholders”.
Membership in this elite group is automatic and complimentary for all companies listed on Bursa Malaysia with at least RM1 billion in market capitalisation. There are 161 members in the club this year.
As recognition is the best reward for accomplishment, it is The Edge’s hope that the awards continue to encourage more companies to strive even harder for excellence.
The sectoral awards are:
The 17 categories are:
THE EDGE BRC SECTORAL CORPORATE AWARDS
To be eligible for the corporate awards, a BRC member must have been listed at least four calendar years before the end-June cut-off date in the current year, as companies are evaluated on their financial performance over three years. The cut-off date was changed to June 30 from March 31 this year, owing to the Covid-19 pandemic.
The methodology for the corporate awards is both stringent and transparent, with the results audited by Deloitte Malaysia. The data used to determine the companies that qualify for The Edge BRC membership and winners of The Edge BRC Corporate Awards is provided by Asia Analytica Data Sdn Bhd.
Members eligible for the Highest Return on Equity Over Three Years and Highest Growth in Profit After Tax Over Three Years awards must be profitable every year throughout the evaluation period. This year, the evaluation period is from FY2016 to FY2019. Calculation for PAT growth is also subject to a risk-weighted factor component to recognise the importance of consistency in profit delivery throughout the evaluation period.
Winners of the Highest Returns to Shareholders award are judged based purely on total return, consisting of share price gains and dividends over a three-year period. The cut-off date this year was June 30.
Companies with scores within 0.5 point of each other are deemed to be of the same rank. There could, therefore, be cases of joint winners.
THE EDGE BRC BEST CR INITIATIVES AWARD
Eligible companies are traditionally evaluated by a panel of judges on their CR initiatives, which usually account for 30% of the evaluation for The Edge BRC Company of the Year award. This year, however, there is no score for CR because of limitations as a result of the change in the cut-off date. Therefore, no CR awards are given out this year. The CR qualitative component has been removed from the evaluation criteria in The Edge BRC Company of the Year award and weightage was reallocated among the remaining quantitative evaluation criteria.
THE EDGE BRC COMPANY OF THE YEAR AWARD
The Company of the Year award recognises the year’s best company based on the following factors:
Evaluation component weightage to overall score
|Returns to shareholders over three years||30%|
|Growth in profit after tax over three years||40%|
|Return on equity over three years||30%|
|The final decision on The Edge BRC Company of the Year takes into account other qualitative elements as determined by The Edge|
VALUE CREATOR: OUTSTANDING CEO OF MALAYSIA
The winner(s) of this award is determined by The Edge based on an assessment of the person’s contribution to value creation for his/her company. Here, value creation is reflected in the company’s market valuation, return to shareholders and stakeholders, revenue and profit growth as well as employment creation. To be chosen, the CEO must have achieved outstanding success in all these areas. Assessment starts from when the person became CEO of the company. The Edge has absolute discretion in deciding on this exclusive award and can choose not to name a winner — as was the case in 2011 and 2015 as well as this year.
In 2010, the award went to Tan Sri Teh Hong Piow and Datuk Seri Nazir Razak for their outstanding contribution to their respective banking groups, Public Bank Bhd and CIMB Group Holdings Bhd.
In 2012, the recipients were AmBank Group founder and chairman Tan Sri Azman Hashim and AirAsia Bhd co-founder and group CEO Tan Sri Tony Fernandes. Azman remains a financier for all seasons; Fernandes won for his role in transforming Asia’s aviation industry. In 2013, the award went to Tan Sri Abdul Wahid Omar and Tan Sri Liew Kee Sin, former president and CEO of S P Setia Bhd. Abdul Wahid was recognised for his leadership during his tenure as CEO of Renong Bhd (2001 to 2004), Telekom Malaysia Bhd (2004 to 2008) and Malayan Banking Bhd (2008 to 2013). Liew won for his contribution at S P Setia, a company he left in April 2015 (after about 18 years) for niche developer Eco World Development Holdings Bhd.
In 2014, the award went to Sunway Group founder and executive chairman Tan Sri Jeffrey Cheah and Axiata Group Bhd president and group CEO Tan Sri Jamaludin Ibrahim for having shown exemplary leadership in building businesses and creating value for all stakeholders. In 2016, the award went to Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar, who was instrumental in not only transforming the institution but also the collective transformation of 20 government-linked companies across varied industries.
In 2017, the award went to self-made billionaire Tan Sri G Gnanalingam, executive chairman and co-founder of Westports Holdings Bhd. Regarded as Malaysia’s first home-grown marketing guru, “Tan Sri G” transformed backwater Pulau Indah into a transshipment hub that has also changed the livelihood of the locals.
In 2018, the award went to Tan Sri Ngau Boon Keat, executive chairman and co-founder of Dialog Group Bhd. The passionate engineer, who helped negotiate Malaysia’s first production-sharing contract with foreign oil companies in 1974, has steered Dialog from strength to strength in the past decade while most oil and gas companies were being ravaged as oil prices fell.
Last year, the award went to Dr Chia Song Kun, executive chairman of QL Resources Bhd, which was transformed from a local feedstock trader into a multinational agro-food corporation under his watch in less than four decades. A true rags-to-riches story, his inspiring tale of a seashell seller from the swampy, backwater coastal village of Sungai Burong in Selangor proves that education and ingenuity can help lift more than one’s own family out of poverty.