The Fastest Growing 50

2008 marked the 7th year of the Fastest Growing 50 (FG50) annual ranking exercise conducted by DP Information Group. Since its launch in 2002, this annual ranking exercise has recognized more than 200 companies in the business community in Singapore. Past FG50 ranked companies have gone on to list on the stock exchange, or have received an influx of investment capital. Amongst the past ranked companies of the FG50, Banyan Tree, Ban Leong Technologies, Ocean Sky International and Mobile One have proceeded to make Initial Public Offers.

The FG50 ranking exercise offers something different from other ranking exercises. Companies are neither ranked by absolute turnover nor net profit, but by 3 years of Compounded Annual Growth Rate (CAGR). As such, this ranking exercise serves as a platform to recognize high-growth companies, highlighting the best performing companies within the different sectors.

The number of companies qualifying for FG50 2008 hit a record high of 350, an impressive 46% increase over the previous year. These 350 companies have demonstrated at least 10% growth in their sales turnover in the last 4 years, and these companies have remained profitable during the ranking period. This is a remarkable achievement by the business community in Singapore.

As noted in the previous year’s ranking, the number of Small-Medium Enterprises (SMEs) continues to grow at a rapid rate. In this year’s ranking, the number of qualifying SMEs almost doubled to 84 (FY07: 43), accounting for 23.1% of the total number of companies who qualified. And among the top 50 companies ranked, 32% are SMEs.

As competition within the business community intensified, the companies that make it to the top 50 fastest growing companies are highly successful in establishing their niches and competitive advantages. On a special note, the Compounded Annual Growth Rate (CAGR) cut-off for this year’s FG50 winners has increased from 61.8% a year earlier to 73.0%, the highest ever recorded since 2002.

While the Wholesale and Manufacturing sectors continue to dominate the FG50 list of winners we observe that the number of FG50 winners have dropped to 34% for the Wholesale sector and 18% for the Manufacturing sector. The sectors that are witnessing an increase in number of FG50 winners are the Communication / Transport / Storage, the Construction and the Property sectors.

The Singapore Communication / Transport sector expanded by 5.1% last year, following a 4.7% growth in 2006. The steady growth within the Communication / Transport / Storage sector saw a jump of 3 companies ranked in the top in the previous year to 7 this year. On a significant note, all 7 are first-time FG50 entrants and winners. Amongst the 7 companies ranked, 3 are from the marine related transport industry, while the rest are engaged in Supporting / Auxiliary / Post Activities.

Although challenged by high crude oil prices, the market outlook for the marine related transport industry is expected to remain robust in the coming year. The rising global demand for oil due to economic expansion in countries such as China and India has spurred investments into the exploration and production sectors. As global orders flow in, there is an abundance of business opportunities for those in the ship repair, ship-building and marine engineering activities in the region.

Meanwhile, Singapore’s Construction sector has boomed after years of languishing at below S$12 billion contract level. The last peak for the Construction sector was in 1997 when a total of S$24.4 billion contracts were awarded. Last year, total contracts awarded hit a new record high of S$24.5 billion.

With the Construction sector posting a strong performance in 2007, we are seeing a higher number of profit-making construction companies registering at least 10% growth for the last 3 years. 13 companies from the construction sector qualified for the FG50 ranking exercise this year, of which 5 have emerged as FG50 winners.

The sterling performance of the top 50 winners in the FG50 ranking exercise in recording 3 years of Compounded Annual Growth Rate (CAGR) ranging from 73.0% to 514.1% is a testament that the business community in Singapore is growing at a healthy rate notwithstanding the turbulence in the global financial markets and a slowdown in the United States economy. Nonetheless, Singapore companies should gird themselves for further uncertainties ahead, in face of rising business costs and fuel prices.