KUALA LUMPUR: Malaysia ranks seventh globally in terms of the number of family-owned businesses and 11th in Asia Pacific-ex Japan in terms of average market capitalisation at US$3.8bil, according to Credit Suisse Research Institute (CSRI).
“Malaysia’s Press Metal
is among the top 50 family-owned companies globally with market capitalization above US$2bil in terms of average revenue growth since 2014,” CSRI said in a report.
Press Metal is ranked 32nd under the top 50 companies by revenue growth and 44th under the top 50 companies by share-price returns.
The CSRI released its third edition of the “The CS Family 1000” report on family-owned companies globally. The report reviews the investment case for family-owned companies and reveals that they have outperformed broader equity markets in every region and sector by an average of 3.9% per year since 2006.
Asia Pacific ex-Japan family businesses have also outperformed non- family-owned companies at an annual average of 3.1% across all sectors.
In addition, CSRI revealed that the financial performance of family owned companies was also superior to non-family owned peers. Furthermore, family businesses appear to focus more on long-term growth and their share price returns have been stronger than their peers.
In a statement, Credit Suisse head analyst of thematic investments Eugene Klerk said: “Family owned businesses are outperforming their peers in every region, every sector, whatever their size.
“Our research seems to suggest that investors are not too concerned about the level of ownership but rather how involved the family owners are in the daily running of the business. This seems to be at the core of the success of family owned companies in our view,” said Klerk, who is also the report’s lead author.
The majority of companies included in the database are located in emerging markets, with Asia Pacific ex-Japan alone contributing 536 or 56% of the total and 38% of total market capitalisation.
This Asian universe consists of companies ranging from US$200mil to US$463bil in market capitalisation. China tops the charts with the highest representation (167), follow by the US (121) and India (108).
Among the top 25 countries with the largest number of family-owned businesses, 11 are in Asia including Malaysia (7th), Thailand (8th), Indonesia (9th), Philippines (11th), Singapore (17th).
Among the top 25 countries globally in terms of average market capitalisation of family-owned businesses, seven are in Asia including Singapore (16th) and Philippines (25th).
Within Asia Pacific ex-Japan, in terms of average market capitalisation Singapore family businesses come third at US$7.5bil following Korea and Hong Kong, Philippines is 6th at US$5.6bil, Thailand 7th at US$5.2bil, Indonesia 8th at US$5bil and Malaysia at US$3.8bil.
The report also revealed that the financial performance of family-owned companies is superior to that of non-family-owned businesses. Revenue and Ebitda growth is stronger, Ebitda margins are higher, cash flow returns are better and momentum in gearing is more moderate.
The report finds that family-owned companies in Asia Pacific ex-Japan have traded at a premium relative to non-family-owned companies since 2006, recording a 10-year average of 8%.
It said an exception to this was during the financial crisis of 2008, when family-owned companies in Asia Pacific ex-Japan traded at a discount of –7% relative to non-family-owned companies.
“At a country level, Chinese, Indian and Indonesian family-owned companies appear to be the most expensive, trading at high absolute multiples, with a 12-month median price-earnings ratio (P/E) of between 15 and 16 times, compared to around 10 to 13 times P/E multiples of companies in Korea, Hong Kong and Singapore,” it said.
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