Its annual report showed a 10 year TSR (total shareholder return) of 7%, 20 year TSR of 8% and a 40 year TSR of 12%. These numbers appear impressive, compared with the inflation rate.
I believe that the TSR are inflated, due to their accounting practice.
I believe (but not verified) that SingTel was transferred to Temasek Holdings at its book value before 1994. It was listed in 1994 at a huge gain. This was probably included in the calculation of the 40 year TSR.
In July 2009, Changi Airport was transferred to TH for $2 billion. I suppose that it was the book value, and that the airport was highly profitable at that time. The real value of the asset should be much higher than the book value.
Some time in the future, Changi Airport will be listed in the stock exchange and the market valuation would probably be much higher than the book value. This gain would probably be counted in the TSR of TH.
It is possible to make special adjustment to remove the Sing Tel gain from at the time of listing from the computation of the TSR. I do not know if this was done.
My comment would also apply to the future listing of Changi Airport.
I do not have access to the actual numbers, so my perception and analysis could be wrong. We have to wait for clarification, if it ever comes.
Tan Kin Lian
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