- Straits Trading Company (“STC”) reported a 7.1% year-on-year (YoY) growth in revenue to S$252.5M in 1H24 but EBITDA fell -15.7% YoY to S$66.3M, weighed down by its resources segment.
- We retain our optimistic view on the outlook. We expect the Group to remain profitable and earnings to gradually rebound.
- While STC’s credit profile has moderated over the past year, it remains decent in our view, supported by strong liquidity.
- We like STRTR 4.100% 04May2026 Corp (SGD) and STRTR 3.750% 29Oct2025 Corp (SGD) while STRTR 4.700% 24Jan2029 Corp (SGD) remains a decent option for investors looking for longer-term bonds.
Company Background
Higher expenses weighed on profits while revenue continue to grow
Chart 1: Revenue for STC has grown by 7% YoY but higher expenses have weighed on PATNCI
Real Estate segment continues to anchor earnings
Chart 2: STC's real estate segment continues to grow, anchoring the Group's EBITDA

Remain optimistic on STC’s earnings outlook
Available liquidity alleviates credit risk in the near term
Capital structure remains decent
Chart 3: While net gearing has risen, it remains around the peer average

Chart 4: Net debt to asset ratio has ticked up but is not much higher than the peer average
Operating cashflow fell but not a red flag
Credit metrics have broadly moderated in 1H24
Table 1: Several credit metrics have broadly moderated over the past year
|
Metrics |
1H23 |
2H23 |
1H24 |
|
Total Borrowings |
S$ 1,602.2M |
S$ 1,621.5M |
S$ 1,723.1M |
|
ST borrowings / (% of total borrowings) |
S$ 181.3M (11%) |
S$ 292.5M (18%) |
S$ 225.0M (13%) |
|
Net debt/ Total Asset |
35.0% |
33.8% |
35.5% |
|
Net Gearing |
71.2% |
72.8% |
79.9% |
|
EBITDA/ Finance Cost |
1.9x |
0.02x |
1.5x |
|
Operating Cashflow/ Finance Cost |
0.8x |
1.2x |
0.7x |
|
Sources: Bloomberg Finance, iFAST Estimates. Data as of 21 October 2024. |
|||
Recommendations
Table 2: Unrated fixed rate issuances from Straits Trading and comparable peers
|
Bond |
Issuer |
Price |
Remaining Years to Maturity (years) |
Ask YTM (%) |
|
The Straits Trading Company |
100.2 |
1.02 |
3.54 |
|
|
The Straits Trading Company |
99.80 |
1.53 |
4.27 |
|
|
City Developments |
98.90 |
1.42 |
3.11 |
|
|
OUE Treasury |
99.72 |
1.92 |
3.65 |
|
|
Wing Tai Holdings |
101.03 |
2.59 |
3.68 |
|
|
Keppel Land |
97.94 |
1.60 |
3.34 |
|
|
Sources: Bondsupermart, Bloomberg Finance, iFAST Compilations. Data as of 21 October 2024. |
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