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Singapore Digital Transformation - Cherrypicking Pro-active Leaders and Fast-Followers

Shared By Stock Fanatic on Tuesday, May 15, 2018 | 15.5.18

• Playing field across the sectors in Singapore is shifting fast

• Banks are Pro-active Leaders while Aviation and Logistics incumbents are Fast Followers

• Companies we like are– Singapore Airlines, Singapore banks, iFast, ST Engg, Singtel, SingPost, MapleTree Commercial Trust & Y Ventures.

Why should one pay attention to the playing field? We define the playing field as a function of technological capabilities and regulations, and it may favour either challengers or incumbents, depending on the swing of these two factors. We looked at the market share secured by the digital challengers so far and the incumbents’ adaptiveness of the digital model to understand the tilt of the playing field. In our view, there is a level playing field across the financial, logistics, and aviation sectors now, whereas the playing field is tilted in favour of digital challengers in the retail and land transportation sectors.

Favor incumbents who are Pro-active Leaders or Fast Followers. Fintech players in Singapore have secured negligible market share so far with many of them adopting Business to Business (B2B) model. Singapore Banks, supported by a nimble regulator, are trying to leverage their customer base to embed banking services into e-commerce transactions, using public cloud services to cut costs and launching application programming interfaces (APIs) for third parties to transform into a platform.

We like iFAST for its profitable and highly scalable wealth management platform. Meanwhile, Aviation incumbent Singapore Airlines - challenged by 100% online distribution model of budget carriers – is recovering its share supported by personalized end to end tarvel experience and productivity improvement to move passengers, baggage and cargo. In the logistics sector, there are multiple lastmile challengers such as Ninja Van, aCommerce etc.

However, SingPost with regional warehouse and fulfillment capabilities in Asia seems prepared with
(a) unique automated parcel sorting facility for rising e-commerce volumes,

(b) a network of lockers for pickups in Singapore and

(c) latest digital solutions adopted from other countries

There are also winners in sectors where incumbents are slow to adapt. We like MapleTree Commercial Trust for its largely resilient mega-malls and Y Ventures for its data-driven ecommerce in the retail sector. We prefer Singtel for its newer digital revenue streams coupled with digitisation of operations to cut costs and gain market share. We also like ST Engineering which targets to leverage its track record in Singapore to double its Smart City revenue across the globe by 2022.

Source : DBS Group Research
(Read Report)


Posted on Tuesday, May 15, 2018 | 15.5.18
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