20150615 Temasek’s $354 million portfolio at inception, long-term TSR and ‘facts’ a load of crap, transparency needed

Temasek has repeatedly stated its portfolio value at inception to be $354 million. Due to PAP’s opacity, this figure could not be verified and has resulted in Temasek’s unbelievable 40-year Total Shareholder Return (TSR) of 16%. Temasek’s figures are suspect for a number of reasons.


35 companies were transferred to Temasek in 1974 to hold and manage. One of the companies was Singapore Airlines Limited (SIA). The PAP government had pulled out all the stops to ensure SIA’s success by constructing all necessary infrastructures and provided the land to build the required facilities. Millions of tax dollars and CPF monies were spent on staff training and construction/maintenance of facilities/aircraft hangars which enabled SIA’s passenger volume to hit the 1 million mark in 1973. Without constructing the necessary facilities, SIA would not have been able to handle passenger traffic which doubled by 1976. SIA had also “embarked on a large-scale training program for all of its staff that included a S$20 million training center and several state-of-the-art flight simulators”. SIA could not have been worth peanuts.

On average, SIA spent S$35 million per year on advertising during its first 21 years”. Granted that advertising expenses may be initially lower than $35 million, SIA would have been worth many times its advertising expenditure. Would SIA have spent, say, $20 million on advertising if it was worth only $20 million or even $50 million? SIA was worth hell of a lot in 1974 when it was transferred to Temasek.

SIA’s origin lies in the formation of Malayan Airways in 1937 and like our CPF, nothing was built from scratch but mostly inherited from the British. The government had also injected capital into Malayan Airways which subsequently changed its name to Malaysian Airways and finally to Malaysian-Singapore Airways. The PAP government would have invested tens of millions or probably more than $100 million before MSA split into SIA and MAS in 1972. It is due to heavy investments by PAP, using tax dollars and CPF monies, that SIA was able to make a profit of $15.5 million in the first year. (you think PAP so clever meh?)

By 1974, its passenger traffic had increased to over 1 million. SIA simply could not have been worth below $100 million if it was able to make a profit of close to $20 million. The $354 million price tag on Temasek’s 35 companies could only mean SIA was handed to Temasek on a silver platter. This, together with the transfer of other assets at way below fair value, allowed Temasek to subsequently claim a ridiculously high 40-year TSR of 16%.

The PAP would have likely rented land to SIA at nominal rates instead of at market rate which renders the calculation of SIA’s/Temasek’s TSR flawed. In 2014, a piece of government land continued to be rented out at $45 a year to a private company instead of $830,000 (market rate) for 14 years. Such a company had therefore made an additional $11.6 million, excluding interest and profits from reinvestment. The difference between renting out government land at nominal instead of market rate increased SIA’s earnings which inflated Temasek’s TSR.

Layman’s terms:

I invested $1 million in a retail business which required renting a shop at $500,000 per year. My Ah Kong was a kind man and allowed me the use of his property FOC. In the first year, my net profit was $500,000. My return on investment was 50% only because of the help from Ah Kong, without which it would have been ZERO. Similarly, SIA’s profits would have been impacted by the non-payment of market-rate rental.

An estimated more than $100 million of tax dollars and CPF monies had been spent on SIA by the PAP. However, the PAP has refused to reveal the value of SIA when it was transferred to Temasek Holdings in 1974.

Intraco Ltd, DBS, NOL, …

Other national assets were also transferred to Temasek at ‘Great Singapore Sale’ prices. One such company was, Intraco Ltd, Singapore’s international trading company. Intraco had an authorised capital of $50 million consisting of 50 million ordinary shares at $1 with 30% investment from the government and 70% from the private sector.

In December 1972, Intraco was listed on the stock exchange and 2 million shares were offered to the public. Intraco shares closed at $6.80 on the first day of trading. Intraco was valued by the market at more than $100 million!

Image source: nlb.gov.sg

Six companies – SIA, Intraco, NOL, DBS, Keppel Shipyard and Jurong Shipyard – were alone worth more than $354 million.

Unless the PAP discloses all relevant information on the valuation of Temasek’s companies at inception, the public will remain unconvinced of Temasek’s TSR data.

Not only were national assets transferred to Temasek at fire-sale prices, their portfolio values are also a load of crap.

In 1994, Temasek’s market value of its portfolio was about $66 billion (chart below). This is definitely incorrect because Singtel alone had a market value of more than $40 billion!

Image source: Temasek Review

Singtel became a public company in October 1993. After its IPO in November, Temasek still owned 89% of Singtel’s 15.25 billion shares with a market value of $43 billion. Temasek had also pocketed about $3.2 billion from Singtel’s IPO. Temasek’s shareholdings of DBS had a market value of at least $4 billion, Keppel Corp $2 billion, PSA, NOL, MediaCorp, Sembcorp, etc. The original 35 companies and numerous assets subsequently injected into Temasek would have boosted its market value way above $66 billion.

The PAP is not doing Singaporeans any favour by disclosing information which should have been in the public domain since the last century. Temasek has the responsibility to be upfront by disclosing absolute figures such as:

– The value of individual assets injected into Temasek or their individual purchase price.
– The selling price.
– Relevant details in every transaction.

Only profitable companies injected into Temasek

Temasek’s performance should never be compared to any private fund manager because it receives profitable companies from the PAP. What Temasek does is merely hold on to these profitable companies, divest them for a huge profit and claims all the credit. An example would be the 3 power stations which were sold for close to $12 billion in 2008 but Temasek did not make a $12 billion profit.

SMRT and SBS Transit have been consistently making increasing profits in tandem with the increase in population/ridership. Both stocks looked set to join the list of penny stocks but was given a $2.2 billion rocket booster by PAP’s BSEP.

Not only are profitable companies injected into Temasek but whenever they are in trouble, Temasek can count on PAP for billions of tax dollars to bail them out.

101% sure-make-money company also handed to Temasek

In 1980, Singapore’s recession-proof 101% profitable company, Singapore Pools (SP), was transferred to Temasek. SP had made billions for Temasek in 24 years before it was acquired by the Tote Board, a statutory board under the purview of the Ministry of Finance.

It is due to such companies being transferred to Temasek that has helped it produce unbelievable returns and not due to the efforts of Temasek’s board. PAP government has yet to reveal to the public the total profits made by SP as well as the amount paid by Tote Board to Temasek.


Temasek’s $354 million portfolio of 35 companies at inception is a misstatement. The PAP government had invested hundreds of millions/billions of tax dollars and CPF monies in them over many years. Without this, they could not have been profitable.

Post inception, PAP transferred only companies which were highly profitable to Temasek. Legislations were also tweaked to ensure their survival, such as, the injection of $2.2 billion into public transport operators, SMRT and SBS Transit. Temasek contributed little to nothing in the management/profitability of its stable of companies as they were already profitable before being transferred to Temasek.

Power stations, Singapore Pools, etc have contributed tens of billions to Temasek’s profits. However, PAP has concealed their contributions which many believe would be politically suicidal if disclosed.

With regard to Temasek’s unbelievable 16% 40-year TSR, PAP should not expect Singaporeans to blindly accept such ridiculous data. If Temasek were a private fund manager and presented such data to its shareholders, it would have been history decades ago.

PAP must provide more transparency on Temasek, failing which Singaporeans will continue to believe its ‘facts’ are probably a load of crap.

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