DiGi, IOI and PPB top list in creating value for investors

Published: 2009/11/23

DiGi.Com Bhd (6947), IOI Corp Bhd and PPB Group Bhd top the list of Malaysian companies when it comes to creating value for investors over a cycle of boom and bust, according to a management consultant.


Using Bloomberg data, Stern Stewart & Co has ranked the 100 biggest local firms on its calculation of RWA (relative wealth added) and WAI (wealth added index) from 2001 to the early part of 2009.

It covers a full business cycle in which the expansion period was from May 2001 to November 2008, followed by the contraction period that lasted till March this year.

RWA benchmarks a company's total shareholder returns compared with its peer's performance.

WAI benchmarks total shareholder returns relative to the cost of equity, which is the average minimum return required by investors for the risk they are taking.
"Staple industries have done better throughout the cycle. This is expected given the last crisis," Stern Stewart's president international Erik Stern said, referring to the performance of Malaysian companies.

"What is remarkable is that companies that belong to more volatile industries, such as DiGi (telecoms) and Public Bank (banks), have fared better than most staple companies," he said in an interview.

"The same can be learned if one looks at the bottom of the ranking. Companies in industries that are less affected in a downturn, such as Tenaga Nasional and YTL (utilities), have not managed to ride the cycle as well as others.

"The main take-away is that companies cannot just 'sit back' and ride the cycle. Shareholder wealth is not only determined by the industry, but also on management."