Tencent, Apple lead "value creators"

WARC, 27 September 2011

MUNICH: Tencent, Apple and Volkswagen are among the brand owners successfully "creating value" despite the prevailing economic uncertainty, the Boston Consulting Group has revealed.

BCG assessed 941 companies worldwide, naming 192 that yielded the best total shareholder return (TSR), based on the capital gains and dividends provided to investors, and factors like margins, sales growth, net debt and share multiples from 2006-10.

Overall, it warned a "new normal" - marked by slow GDP growth, possible stagflation, a sensitivity to risk on the part of investors and the retirement of baby boomers - requires a change in mindset.

"For many companies, maintaining historical levels of revenue growth will only come by winning market share. Competitive intensity will increase, and real winners (and losers) will emerge," BCG said.

Looking at firms boasting stock market valuations over $35bn, Tencent, the online giant from Hong Kong, led with a TSR of 83.4%, not least thanks to its sales expansion of 69% in the timeframe monitored by BCG.

PotashCorp, a Canadian chemicals expert, posted 38.5%, beating Apple, the US electronics pioneer with one of the highest stock valuations at $296bn, on 35%. Volkswagen, the German automaker, was fifth on a TSR of 33.8%.

In all, six of the top ten "large cap" operators were from mature markets, a selection also featuring Amazon, the online retailer, Novo Nordisk, a Danish pharma group, and Deere & Company, the machinery manufacturer.

When including players with smaller stock valuations, Shandong Weigao, a medical technology provider, logged a TSR of 93.2%, ahead of Tencent, and then Baidu, the search engine, on 72.7%, completing a top three for China and Hong Kong.

Jindal Steel & Power, the Indian mining group, Industrias Penoles, a Mexican enterprise in the same sector, and Aboitiz Equity Ventures, a conglomerate from the Philippines, took the next three spots.

Three American firms followed, headed by CF Industries, a chemicals manufacturer, Deckers Outdoor, the consumer durables and apparel maker, and Terra Nitrogen, another chemicals specialist.

Xinyi Glass, an automotive components supplier in Hong Kong, made up the top ten, meaning companies based in fast-growth economies contributed seven of this elite group.

However, such a figure actually constituted a decline on last year, when all ten were headquartered in Asia. The proportion of emerging market firms in the 192 leading players also fell from 57% to 46% in this period, BCG added.

Data sourced from Boston Consulting Group; additional content by Warc staff

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