At times, a company may need to take a step back and assess its business prospects.
By reviewing its divisions and processes, the business can then take steps to improve its efficiency and deliver greater value to shareholders.
Such reviews are known as “strategic reviews” and may involve the divestment of non-performing divisions or initiatives to reduce expenses to right-size the business.
If successful, such reviews may result in higher revenue and profits and lead to a share price surge should investors recognise the merits of the exercise.
Here are four Singapore companies that announced strategic reviews that could see their share prices increasing next year.
Seatrium Limited (SGX: S51)
Seatrium, previously Sembcorp Marine, provides a diverse suite of products and services to the oil and gas industry.
The group is also focusing on sustainable solutions that are in line with the global energy transition and maritime decarbonisation move.
Back in May 2023, Seatrium launched a strategic review and this holistic review will assess the group’s capital structure after the merger with Keppel Limited’s (SGX: BN4) offshore and marine division.
CEO Chris Ong will also assess how Seatrium can best position itself to tap into growth opportunities with the global green energy transition.
This review will also determine if a share consolidation is required with the merger leading to a very high base of issued shares for the oil and gas support giant.
For its recent third quarter 2023 (3Q 2023) update, the blue-chip group demonstrated good project execution with eight deliveries year-to-date.
There are also 33 projects in progress with deliveries up till 2030, and Seatrium’s order book stood at S$17.7 billion as of 30 September 2023.
The outcome of this strategic review will be communicated during Capital Markets Day in the first quarter of 2024 (1Q 2024).
Singapore Post Ltd (SGX: S08)
Singapore Post, or SingPost, is a postal and eCommerce logistics provider with over 4,900 employees with offices in 13 markets worldwide.
The group’s board of directors had initiated a strategic review back in July 2023 to enhance shareholder returns and ensure that the postal group is “appropriately valued”.
Management is also mulling over the status of its Post and Parcel division which incurred an operating loss in the first half of fiscal 2024 (1H FY2024).
This review will also address SingPost’s core and non-core divisions and may see the sale of non-core divisions with poor returns.
This review is expected to complete within FY2024 ending 31 March 2024 and recommendations will be presented to the board.
Meanwhile, SingPost is expanding its integrated logistics network with the recent acquisition of Border Express in Australia for A$210 million.
Upward adjustments to international postage rates are also expected to kick in from 1 January 2024.
Singtel (SGX: Z74)
Singtel is Singapore’s largest telecommunication company and offers services such as mobile, pay TV, broadband, and cybersecurity.
The blue-chip telco has an ongoing strategic reset that was initiated back in May 2021.
Back then, CEO Yuen Kuan Moon explained that this review was necessary to realign Singtel’s businesses to put them on track for growth.
Its Investor Day 2022 helped to update the group’s goals and set the direction for the growth of various divisions including Singapore Consumer, Optus (Australia), and its regional data centre platform.
Fast forward to this year, and Singtel’s most recent Investor Day 2023 sets out its priorities for riding on tailwinds to grow further.
The group is also targeting a double-digit return on invested capital (ROIC) with its recent fiscal 2023 ROIC coming in at 8%.
Management continues to see potential in building a regional green data centre platform while providing an integrated “One Optus” experience for customers.
The group’s core consumer offerings will be refreshed to increase loyalty and drive revenue growth.
Elsewhere, the Singtel-Grab (NASDAQ: GRAB) digital bank GXS Bank also went live earlier this year and is offering both a savings and loan product.
Assuming Singtel pulls off this strategic reset successfully, it could reinvigorate the telco’s growth and put it back on the path towards higher dividends.
StarHub Ltd (SGX: CC3)
Like Singtel, StarHub is also a telco and offers mobile, broadband, and Pay TV services to customers.
The group has initiated the second phase of its strategic review known as DARE+ which targets S$280 million in cost savings and S$220 million in gross profit growth between 2022 and 2026.
DARE+ follows the conclusion of its DARE strategy that concluded in October 2021 and helped deliver S$270 million in cost savings alongside a 15% reduction in operating expenditure.
StarHub has provided regular updates on its DARE+ strategy starting from its 2022 Investor Day up till its most recent Investor Day 2023.
The telco plans to create an all-in-one app with completion in 2024 and migration by 2025 and will also pursue an ambitious enterprise IT transformation.
Should these initiatives bear fruit, investors could be looking at improved profitability and possibly a higher dividend for 2024.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
