The Smart Investor
    Facebook Instagram
    Tuesday, January 31
    Facebook Instagram LinkedIn
    The Smart Investor
    • Home
    • About
      • About Us
      • Careers
    • Smart Investing
      • Getting Started
      • Investing Strategy
      • Smart Analysis
      • Smart Reads
    • Special Free Reports!
    • As Featured on BT
    • Our Services
      • Our Services
      • Subscribe now!
    • Login
    • Cart
    The Smart Investor
    Home»Blue Chips»Temasek’s Portfolio Hits a New All-Time High: 5 Highlights from the Investment Company’s Annual Review
    Blue Chips

    Temasek’s Portfolio Hits a New All-Time High: 5 Highlights from the Investment Company’s Annual Review

    The investment company continues to manage risks well while growing the value of its portfolio.
    Royston YangBy Royston YangJuly 15, 20225 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    Financial Review
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    Singapore investment firm Temasek Holdings recently released its latest annual review for the fiscal year ended 31 March 2022 (FY2022).

    The firm, which invests in a mix of listed and unlisted businesses, reported that its portfolio value rose to S$403 billion, up 5.8% from S$381 billion a year ago.

    Temasek’s geographic mix has also shifted towards Singapore in recent years, with the island state taking up the lion’s share of its portfolio at 27% for FY2022, up from 24% in FY2021.

    In terms of sector, both financial services and transportation & industrials make up close to half of the portfolio’s total value at 45%, up from 43% last year.

    Chairman Lim Boon Heng acknowledged that the world today is very complex, but that there are “tremendous opportunities” for everyone to work together to overcome the challenges we face.

    CEO Dilhan Pillay sees Temasek Holdings as a purpose-driven organisation that will devote resources to nurture people and prepare them for the future.

    Here are five highlights from the company’s Annual Review that you should know about.

    Investments at a decade-high

    Temasek made S$61 billion worth of investments in FY2022, the highest in a decade.

    This was balanced by S$37 billion of divestments as the company engages in active capital recycling to maximise value.

    The capital was deployed to reposition Temasek’s portfolio for growth in a post-pandemic world, while also locking in gains from divestments based on the company’s assessment of intrinsic value.

    In the last 10 years, Temasek has made a total of S$315 billion and S$234 billion in investments and divestments, respectively.

    Impressive long-term returns

    Temasek’s one-year shareholder return has fallen sharply to 5.8% for FY2022, down from FY2021’s 24.5%, due to global market volatility and steep drops in the value of technology growth stocks.

    However, total shareholder return (TSR) since inception in 1974 stood at an annualised 14% compounded over 48 years, an impressive result by most measures for a portfolio its size.

    The 10-year and 20-year TSRs stood at 7% and 8% compounded, respectively.

    Over the last 10 years, Temasek has seen just two years of negative returns, at -2% in FY2020 and -9% in FY2016.

    The portfolio’s steady returns over long periods attest to its successful strategy of investing for the long-term in a mix of strong blue-chip companies such as Singapore Technologies Engineering Ltd (SGX: S63) and Keppel Corporation Limited (SGX: BN4), as well as cash-generating unlisted assets.

    A four-fold increase in unlisted assets

    The value of unlisted companies within Temasek’s portfolio has increased in FY2022 to take up more than half of the portfolio.

    In the past decade, this segment of the portfolio has generated returns over 10% per annum either through IPOs or trade sales, as well as from the performance of the underlying business.

    Over the same period, the value of these unlisted assets has risen nearly four-fold from S$53 billion to S$210 billion.

    Some examples of these investments include Mapletree Investments Pte Ltd, the Port of Singapore Authority (PSA), and the Singapore Power (SP) Group.

    Tapping on structural trends

    Temasek’s investment philosophy has been guided by four long-term structural trends since 2016.

    They are digitisation, sustainable living, the future of consumption, and longer lifespans.

    Over the years, the company has aligned its portfolio with these trends to enjoy long-term tailwinds.

    Close to one-third of Temasek’s portfolio is now exposed to these trends, up from just 13% back in 2016.

    Strategic partnerships

    Strategic partnerships is another method used by Temasek to catalyse growth and scale up its presence.

    The aim is to grow the firm’s global footprint in sectors such as energy, food, mobility, manufacturing, and the built environment.

    Some notable collaborations include Decarbonization Partners, a tie-up with BlackRock (NYSE: BLK) to accelerate efforts to achieve net-zero emissions.

    Temasek has also partnered with DBS Group (SGX: D05), Standard Chartered Bank (LON: STAN) and Singapore Exchange Limited (SGX: S68) to set up Climate Impact X, a global exchange for high-quality carbon credits.

    To enable the growth of sustainable foods, Temasek has set up the Asia Sustainable Foods Platform to support food technology companies from incubation to commercialisation.

    Get Smart: Heightened risks of stagflation

    While the growth of its portfolio is encouraging, Temasek has also flagged the risk of stagflation as the global economy remains fragile.

    Stagflation, a combination of the words “stagnation” and “inflation”, also raises the risk of a recession.

    The company will slow its investment activities for now as it waits for more clarity but remains interested in new-economy sectors such as new consumption patterns, sustainability, and innovation.

    Did you know there are 5 REIT sectors with a high potential for creating passive income? If you are building retirement wealth, this is crucial information. We have a new report that details all you need to know about them. Find out which sector to pay attention to, and see if you can fit them into your portfolio. Click HERE to download the guide here for free.

    Follow us on Facebook and Telegram for the latest investing news and analyses!

    Disclaimer: Royston Yang owns shares of DBS Group and Singapore Exchange Limited.

    Yahoo
    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    Merger and Acquisition

    What Makes Some Serial Acquirers So Successful

    January 30, 2023
    Data Centre (Sunlight)

    5 Key Takeaways from Mapletree Industrial Trust’s Latest Business Update

    January 30, 2023
    Screen Showing Share Prices

    Get Smart: Why You Shouldn’t Focus on Share Prices Alone

    January 29, 2023
    Facebook Instagram LinkedIn Telegram
    • Careers
    • Disclaimer & Privacy Policy
    • Subscription Terms of Service
    © 2023 The Smart Investor. All Rights Reserved. The Smart Investor, thesmartinvestor.com.sg, an investment education website managed by The Investing Hustle Pte Ltd (Company Reg No. 201933459Z) is not licensed or otherwise regulated by the Monetary Authority of Singapore, and in particular, is not licensed or regulated to carry on business in providing any financial advisory service. Accordingly, any information provided on this site is meant purely for informational and investor educational purposes and should not be relied upon as financial advice. No information is presented with the intention to induce any reader to buy, sell, or hold a particular investment product or class of investment products. Rather, the information is presented for the purpose and intentions of educating readers on matters relating to financial literacy and investor education. Accordingly, any statement of opinion on this site is wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader. The Smart Investor does not recommend any particular course of action in relation to any investment product or class of investment products. Readers are encouraged to exercise their own judgment and have regard to their own personal needs and circumstances before making any investment decision, and not rely on any statement of opinion that may be found on this site.

    Type above and press Enter to search. Press Esc to cancel.