Temasek Holdings SWOT & PESTLE Analysis
COMPANY PROFILE -Temasek Holdings
Business Sector :Banking and Financial, Investment Management
Operating Geography :Singapore, Asia, Global
About Temasek Holdings :
Incorporated in 1974, Temasek Holdings is the Singapore government's state investment arm with two-thirds of underlying assets exposure in Asia, with more than 50% investments in China and Singapore. Their primary portfolio focus remains in the financial services and telecommunications, media & technology sectors. They are known to follow a globally diversified portfolio strategy with their investments revolving around the four main themes of transforming economies, growing middle-income populations, deepening comparative advantages, and emerging champions. Their global portfolio spans a broad spectrum of industries: financial services; telecommunications, media & technology; consumer & real estate; transportation & industrials; life sciences & agribusiness; as well as energy & resources. Amongst the three management reserve entities of Singapore, Temasek Holdings holds highest risk and return exposure. The Singapore headquartered Company differs from other suzerain wealth management firms because it invests lion’s share of its funds in equities, owns several assets, and pays taxes like other commercial investment firms. They have provided a total shareholder return of 14% since inception.Temasek Holdings mission statement reads “ Our mission is to generate sustainable returns beyond our present generation, and are guided by the principles of our Temasek Charter.
Temasek Holdings Revenue :
Net Portfolio value: S$306 billion - as of 31st March 2020Competitive Analysis of Temasek Holdings
| Strengths | Weaknesses |
| 1. Singov owned investment company evidently enjoys strong government support 2. Triple-A ratings by Moody's and S&P 3. Strong leadership at the crest 4. Well diversified portfolio with high quality and liquidity 5. Huge strides in the technology and innovation sphere | 1. Overdependence on the volatile financial services sector 2. Overdependence on China amidst risk of geopolitical tensions |
| Opportunities | Threats |
| 1. India emerging as a promising investment space post-COVID-19 2. Promising investment themes in the agricultural sector 3. Increasing growth opportunities for Internet economy sectors 4. Increasing investments in Asia-Pacific’s especially India’s specialty chemical businesses | 1. Temasek owned Singapore Airlines suffering huge losses, battered and beleaguered by the COVID-19 pandemic 2. Covid-19 and subsequent economic downturn spelling doom for 52.3% Temasek owned Singtel |
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Detailed SWOT Analysis of Temasek Holdings
Strength
1. Singov owned investment company evidently enjoys strong government support: Founded in 1974, while being incorporated under the Singapore Companies Act, Temasek Holdings is the 100% state-owned sovereign wealth fund company. The Singapore Ministry of Finance, being the only shareholder, Temasek Holdings enjoys government support and credibility as compared to other Singapore based investment firms. The government of Singapore's Auditor-General audits the company's financial statements, thus allowing it to achieve the level of transparency required in public. This transparency level is further consolidated by its practice of making its finances public, although as a private firm, it is under no obligation to do so. Financed by the federal reserves, Temasek Holdings had acquired a net portfolio value of S$ 306 billion as of March 31, 2020, which was up by $120 billion over the last decade. Temasek Holdings, riding high on robust government support, has thus been able to be the backbone of Singapore economy and contributed massively towards spurring economic growth. The government support is all the more evident because Singapore's financial strength is linked to Temasek Holdings, one of the three government entities (GIC and MAS).
2. Triple-A ratings by Moody's and S&P: In the eyes of rating agencies like Moody's and S&P, Temasek Holdings' credit profile has a stable outlook known by the triple-A ratings. This mirrors how the institution's credit profile has strong fundamentals with a high-quality investment portfolio. They are also known to provide a steady and recurring dividend income. Temasek Holdings' reputation for being a 100% Singapore government-owned company also benefits the credit ratings. Having a good liquidity profile because they have been in a net cash position since the fiscal year 2008, has also immensely helped it get the AAA ratings. The rating agencies further expect the institution to maintain its cash and liquid securities reserves, thus enhancing its credit profile. Their dividend income has increased from S$ 7.8 billion in 2016 to S$ 11.9 billion in 2020, with liquid assets amounting to S$ 112.4 billion and liquidity balance remaining stable at S$ 47.1 billion. A total debt hovering at 5% of net portfolio value and interest expense pegged at 3% of the dividend income, furnishes clear testimony of the financial strength of Temasek Holdings.
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Weakness
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Opportunity
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Threats
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DELIVERY AND FORMAT
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References used in Temasek Holdings Analysis Report
1. Liquefied Natural Gas (LNG) Portal
Bloomberg Professional Services - https://www.bloomberg.com/professional/solution/bloomberg-lng-portal/
2. Pavilion Energy formed to Supply Asia's Rising Gas Demand - https://www.energydigital.com/utilities/pavilion-energy-formed-supply-asias-rising-gas-demand
3. Temasek Eyes Health, Education Tech Investments After Pandemic - https://www.bloombergquint.com/business/temasek-eyes-health-education-tech-investments-after-pandemic
4. How DBS is reaping the dividends of digital transformation - https://www.computerweekly.com/news/252481976/How-DBS-is-reaping-dividends-of-digital-transformation
5. Yuan keeps appreciating, buoyed by China’s robust economy - https://www.globaltimes.cn/content/1208053.shtml
The detailed complete set of references are available on request in the 'Complete report' on purchase.
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Temasek Holdings SWOT and PESTLE analysis has been conducted by Srijita Paul and reviewed by senior analysts from Barakaat Consulting.
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