Business Times Singapore. English., © 2008 Singapore Press Holdings Limited

The shares of companies with strong brands perform better than those of less well-known companies, according to a joint report by brand strategy consulting firm StrategiCom and DMG & Partners Securities.

The study shows the positive impact of a strong brand is strongest in three industries: property/real estate investment trusts (Reits); retail/food and beverage; and environment.

'The active property/Reits market in Singapore experienced high media coverage due to numerous en bloc negotiations and burgeoning rent prices. It was also reported that property investment sales in Singapore hit a record high in 2007,' according to the report, authored by StrategiCom's principal consultant and chief executive officer Wilson Chew and DMG's senior vice-president (research) Terence Wong. 'These factors have heightened awareness among Singaporeans towards firms in the property/Reits industry, contributing to their better financial performance.'

On the other hand, the perception of retail/F&B brands entails not merely physical goods sold but also a 'connection with customers', where trust and respect are essential in building brand strength, the study shows.

The least market rewards are reaped by companies in the finance, manufacturing (non-technology), services, transport and logistics, and technology sectors.
'With the current sub-prime crisis overseas, many major companies' financial performance has been hit,' the authors note. 'This may have affected some market indicators and (caused) sentiments to shift out-of-the-ordinary.'

Sandwiched between the two extremes are the healthcare, hospitality, multi-industry, and offshore and marine sectors.

The study researched the brand strength of 552 active companies listed on the Singapore Exchange (SGX), as perceived by 100 financial professionals and investors.

Brand strength - defined, among other things, by its ability to 'create and maintain top-of-the-mind awareness in the market' and 'strong customer loyalty, even in the face of stiff competition' - was then correlated to companies' corresponding price-earnings ratios, which give their share return expectation.

The report was presented at the Singapore Brand Conference at the Marina Mandarin Hotel yesterday.

To propel its stock, a company needs to build a strong brand, it emphasises. 'External factors which affect the industry are major determinants of companies' share return expectations,' the authors note. 'Since companies are unable to control these factors, they should build up their brand so they can outperform their peers in good times and remain resilient in troubled times.'

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