The FG50 Ranking is an annual initiative that recognizes the Top 50 companies based on the Compounded Annual Growth Rate (CAGR) in turnover over the last 3 financial years. 

In this year’s FG50 ranking, over half (52.0%) of the Top 50 winners have emerged as investment grade companies with a DP Credit Rating ranging from DP1 to DP4. This is followed by over two-fifth (44.0%) having Moderate Risk (DP5 – DP6) and only a handful (4.0%) belonging to the High Risk category (DP7 – DP8). 

The DP Credit Rating, introduced by DP Information Group, is a proven model that measures the Probability of Default (PD) of the evaluated company. DP Credit Rating is derived based on a rating model that takes into account the performance of 6 broad risk categories viz. Profitability, Leverage, Liquidity, Activity, Growth and Size. Tailored to suit the unique characteristics of Singapore companies, the DP Credit Rating has emerged as a powerful financial tool used among financial and government institutions today. Companies are graded on a credit rating scale of DP1 – DP8 where DP1 denotes the lowest PD of less than 0.1% and DP8 signals high default risk of more than 14.0%.

Table 1: Breakdown of FG50 Ranking by DP Credit Rating

Since 2005, FG50 winners have delivered consistently good credit profile with at least half emerging as investment grade companies with year 2006 yielding the highest percentage of DP1-rated companies at 18.0% and more than two-thirds (68%) achieving an investment grade. Another trend observed among the Top 50 Fastest Growing companies since 2006 is the diminishing number of DP8-rated companies. The percentage of DP7-rated companies has also declined from 8.0% in 2005, to 6.0% in 2006 and 4.0% in 2007. On the whole, the last 3 ranking periods have witnessed a downward trend in the number of High Risk (DP7 - DP8) companies.

Table 2: Breakdown of PLCs in FG50 Ranking by DP Credit Rating

Constituting more than one-fifth (22.0%) of this year’s FG50 winners are the big boys listed on the Singapore Stock Exchange. In fact, these Public Listed Companies (PLCs) have demonstrated their ability to achieve low credit risk amidst expansionary strategies to grow in turnover size, with 85.4% and 90.9% of PLCs in the Qualifying List and Top 50 List of this year’s FG50 Ranking having investment grades (DP1 – DP4) in credit rating. 

It was also observed that close to two-fifth (36.4%) of the PLCs in the Top 50 winners list are rated DP4, and this is followed by 27.3% having obtained DP3 in credit rating. 

A leading manufacturer of electro-mechanical modules to the telecommunications, consumer electronics and computing industries, Hi-P International Limited posted 64.2% in CAGR in this year FG50 Ranking. The 4-year repeat winner of the FG50 Ranking has not only made concerted efforts to generate strong turnover growth, but also possess low default risk as an investment-graded (DP1 - DP4) company. As Hi-P International continues to lay its foundation for sustainable growth by acquiring new customers and enlarging its global footprints, it remains vigilant and prudent in financial management, with cash flow being the key aspect in its capital management strategy, and stepping up on the utilization of its manufacturing plants to provide total capability solutions. 

Emerging in the 16th position in this year’s FG50 Ranking, Ezra Holdings Limited led other winners from the Communications/ Transport/Storage sector with a 111.02% in CAGR and is an investment grade (DP1 – DP4) company. Concluding a US$78.05 million sale-and-leaseback agreement on four Anchor Handling, Towing and Supply vessels with Mount Faber KS, Ezra Holdings Limited strengthened its vessels operations and thus reported stronger turnover during its financial year ended 31 August 2005. And in its attempt to fund the rapid growth in the company’s turnover, Ezra Holdings Limited successfully undertook a share placement of 30 million new ordinary shares which were fully subscribed in August 2005.

Best World International Limited, a DP1-rated company, has delivered astonishing results during its financial year ended 31 December 2005 with turnover derived from the distribution and sale of nutritional supplement products, personal products and health-care equipment leaping 77.7% to S$55,098,000. In FY05, Best World International Limited spread its wings in the region, spearheading a rapid expansion into regional markets like Malaysia, Indonesia, Thailand, Vietnam and Hong Kong through careful acquisition of overseas subsidiaries as well as the set-up of new regional centres. And in its pursuit to discover new regional markets, the Group placed out a total of 15 million new shares to provide the necessary fund. 

On the whole, PLCs in this year’s FG50 Ranking have delivered commendable results in terms of credit risk profile. They are to be applauded not only for their ability to generate strong turnover growth over the last 3 financial years, but also their ability in managing all aspects of their financial health, e.g. Profitability, Liquidity, Leverage. In this aspect, the DP Credit Rating is the proven “trust” mark of credit assurance for investors and businessmen in Singapore.

Article Contributed by DP Information Group
www.dpgroup.sg