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ASEAN's midsize companies are becoming major players

Consumers create new opportunities for the "NEXT 1000" of Southeast Asia

SINGAPORE Midsize companies in Southeast Asia are thriving, helped by the region's growing middle class and public works spending.

A Nikkei survey covering Southeast Asian listed companies with annual sales of $100 million or less showed that earnings before interest, taxes, depreciation and amortization in 2017 totaled $9.65 billion, an increase of 20.5% compared with 2012.

The Nikkei has been following up on Japanese listed companies of a similar size -- those with annual sales of around 10 billion yen ($90.5 million) or less -- which are dubbed the "NEXT 1000" companies. The latest survey is the first Southeast Asian version of the "NEXT 1000" series.

That rise in EBITDA far outpaces the 6.3% growth seen during the period for all 3,563 listed companies in the region.

Using data published by QUICK-FactSet on Jan. 25, the survey looked at EBITDA at 2,246 publicly traded companies, all of which are based in the 10 members of the Association of Southeast Asian Nations and have reported revenues of up to $100 million in the latest fiscal year.

The top-performing midsize companies in Southeast Asia broadly fall into three groups. The first comprises those that are profiting from changing consumer tastes and demographic shifts resulting from economic growth.

Top of the list is Thailand's VGI Global Media, the country's largest provider of out-of-home advertising, which commands a 45% market share. VGI Global is under the wing of BTS Group Holdings, which operates Bangkok's elevated railway.

VGI Global's growth is driven by rising numbers of commuters in the capital. This, in turn, has fueled demand for transit advertising. In the year that ended in March 2017, the company's sales rose 30% on the year to 3 billion baht ($95.6 million).

Second in the ranking is Indonesian resort operator Pembangunan Jaya Ancol. Its complex in northern Jakarta has various attractions, including theme parks, highlighting opportunities for growth in the leisure business in Indonesia.

Health care has also grown steadily in the region. Fourth-ranked TalkMed Group, based in Singapore, focuses on cancer treatment. Chiang Mai Ram Medical Business, which operates hospitals in the northern Thai city of Chiang Mai, placed 12th.

Seventh-ranked Inti Bangun Sejahtera builds, leases and manages telecommunication towers. The rapid expansion of fourth-generation mobile service in Indonesia has boosted the company, which is partially owned by Indonesian conglomerate Sinar Mas Group.

Education is in high demand in the Philippines, backed by the country's relatively young population. STI Education Systems Holdings, which ranked 18th, runs 77 educational institutions in the country, including vocational schools.

Companies benefiting from government policies aimed at raising economic growth form another group of strong performers. Large infrastructure projects moving forward under Indonesian President Joko Widodo helped 14th-ranked Nusantara Infrastructure, for example.

Fifth-place My E.G. Services is a Malaysian company that handles online government services, including the issuance of driver's licenses and renewal of foreign laborers' work permits. Founded in 2000, the company has received a steady stream of orders from government agencies, including the police and immigration offices.

Companies in the third category operate in traditional industries, such as raw materials and agriculture. Three Malaysian palm oil producers are ranked among the top 20, including Far East Holdings at eighth.

Nikkei staff writers Jun Endo in Manila, Marimi Kishimoto in Bangkok, and Jun Suzuki in Jakarta contributed to this article.

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