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Introducing the $10 billion club

A woman uses her cellphone at True Urban Park, mobile carrier True's flagship store in Bangkok. The Thai company's market cap has surged ninefold over the last four years.

BANGKOK -- Southeast Asia's $10 billion club keeps getting bigger.

     The Association of Southeast Asian Nations had 44 companies with market capitalizations of at least that amount at the end of October, up from 34 four years earlier. Sure, Japan had 94 such behemoths, Greater China had more than 100 and the U.S. had over 400. But there is no denying the growing significance of ASEAN Inc.

     The bloc's market cap leader is Singapore Telecommunications. Not only is it the dominant carrier at home, but it has also expanded its footprint through equity investments in overseas mobile providers -- such as SingTel Optus of Australia, Bharti Airtel of India, Telekomunikasi Selular of Indonesia, Advanced Info Service of Thailand, Globe Telecom of the Philippines and Pacific Bangladesh Telecom. Globally, the SingTel group counts over 500 million mobile subscribers; it earns the bulk of its profit outside the city-state.

     SingTel aims to build on its customer base to develop its mobile Internet and digital marketing operations. The company is set to invest up to 2 billion Singapore dollars ($1.54 billion) by 2016, hoping to make the most of increasing smartphone usage across Asia. Thanks to the company's acquisitions, and its establishment of "innovation centers" in places like Silicon Valley and Israel, Group CEO Chua Sock Koong is confident that SingTel is "well-placed to capture emerging opportunities in the fast-growing digital marketing business."

On the march

PTT ranks third by market cap but first in terms of net profit. The state-owned oil and energy giant was the only ASEAN company to rake in $3 billion in the most recent fiscal year, according to FactSet, a financial data provider. PTT's business ranges from oil refining and gasoline retailing to resource exploration and petrochemicals. As gas in the Gulf of Thailand is running dry, the company is pursuing overseas resources through acquisitions.

     In 2012, its listed subsidiary, PTT Exploration & Production, beat out Royal Dutch Shell to buy Britain's Cove Energy for 1.22 billion pounds (roughly $1.91 billion at the time). This gave it Cove's assets in Mozambique. In our rankings, PTT Exploration & Production placed 19th in market cap and 10th in net profit.

     According to President and CEO Pailin Chuchottaworn, PTT wants to transform itself from a resource-based company to a knowledge-based one. Aspiring to be innovative and environmentally responsible at the same time, Pailin said his company is pouring money into biochemicals. By offering both bioplastics and biodegradable plastics, he said PTT intends to "utilize groundbreaking green technologies to help our company grow and keep the growth sustainable."

     The companies with the biggest market caps, of course, are not necessarily the ones that have made the fastest gains.

     True Corp., Thailand's No. 3 mobile carrier, has seen its market cap surge almost ninefold compared with four years ago. Despite three straight years of red ink, high interest-bearing debt and slow subscriber growth, the company caught investors' attention in June when it announced that China Mobile, the world's largest mobile company, was acquiring an 18% stake through an issuance of new shares. True's stock shot up.

     Having raised a total of 65 billion baht ($1.97 billion), True announced Nov. 13 that it would upgrade its networks for both home and mobile Internet with a 43 billion baht investment over the next two years. President and CEO Suphachai Chearavanont said the broader goal is to "modernize Thailand's communications capabilities to a level equivalent to other countries." True plans to build a fiber-optic network capable of providing high-speed Internet to 10 million households by 2016 -- roughly half of all households in the country.

     "Its signal is better than other networks," said Sittinun Manopeen, a 30-year-old doctor in Bangkok who has been a True wireless subscriber for three years. To maintain and build on this reputation, the company is also channeling 10 billion baht into the expansion of its fourth-generation mobile network.

Healthy consumption

Hospital shares have also been on the rise, thanks to ASEAN's status as a prime destination for medical tourism. Bangkok Dusit Medical Services has attracted investors by expanding its hospital network through mergers and acquisitions; it is now Thailand's largest private hospital operator. It intends to add six more domestic hospitals by early next year.

     Bangkok Dusit is also looking outside Thailand. With the ASEAN Economic Community set to launch by the end of 2015, the company aims to set up new hospitals in Laos and Myanmar.

     To cater to wealthy Chinese, Bangkok Dusit is preparing to open a hospital in southern China's Yunnan Province. It just opened a new facility in Bangkok's Chinatown.

     Another factor driving market cap growth: consumer spending. Philippine food and beverage company Universal Robina is a force across Southeast Asia, with the exceptions of Brunei, Cambodia and Laos. "We want to be the pre-eminent ASEAN-based food company, which operates throughout the region," CEO Lance Gokongwei said. "And if you are looking in terms of revenue size and growth, we are clearly one of the major players. In the coming year, we will [ring up] $2 billion just on branded food sales."

     Universal Robina is set to open a $30 million sweets plant in Myanmar.

     The Philippines' SM Prime Holdings, the real estate arm of SM Investments, is cashing in on the consumption boom domestically. Its double-digit net profit growth has been driven largely by commercial leasing revenue from its 48 malls around the country, plus five in China. Cinema ticket sales and revenue from amusement facilities have also pushed up its bottom line.

     The consumer sector is boosting Kalbe Farma, Indonesia's largest pharmaceutical company, as well. Products such as over-the-counter drugs, powdered milk and snack bars contributed to the company's 60% revenue growth and 50% profit increase from 2010 to 2013. Kalbe expanded its portfolio in 2012 by acquiring Indonesian energy drink producer Hale International. It has also won over investors with a high dividend payout ratio: The figure was equivalent to 40% of net profit in 2013.

Airports of Thailand, state-owned operator has been increasing its market cap on the back of growing foreign visitors to Suvarnabhumi Airport, Bangkok’s main gateway.

     Infrastructure stocks are hot tickets, too. The market cap of Airports of Thailand, a state-owned operator of six major airports in the country, has increased in line with growing international visitor traffic. Thailand welcomed a record 26 million foreign visitors in 2013, many of them at Suvarnabhumi Airport, Bangkok's main gateway. While this year's tally is expected to fall due to the military coup in May, investors appear bullish about next year.

     Airports of Thailand has also successfully converted Don Mueang International Airport, the old airport that was replaced by Suvarnabhumi, into a base for low-cost carriers.

     On the marine transport front, International Container Terminal Services, a major Philippine port operator, stands out. With trade volumes swelling, the company's board in October approved a $35 million investment to expand the container yard and inland depot at the Manila International Container Terminal.

     SapuraKencana Petroleum, a Malaysian builder of offshore platforms, stands alongside PTT among the region's thriving energy businesses. Since the company took its current form through a merger in 2012, it has achieved notable growth in market value and net profit. The company had an order book worth 27 billion ringgit ($8.06 billion) as of the end of September. Over half of the contracts were from abroad, as Malaysia aspires to become Asia's leading oil and gas hub.

     Ho Chi Minh City-traded PetroVietnam Gas, which did not make our rankings because it has been listed for only two-and-a-half years, still bears mentioning. The company reportedly controls around 70% of the domestic oil and gas market, and it has attracted investors with its strong price-setting power and wide profit margins. Its market cap has tripled from the initial figure.

Nikkei staff writers Mayuko Tani in Singapore, Yukako Ono in Bangkok, Cliff Venzon in Manila, Wataru Suzuki in Jakarta, CK Tan in Kuala Lumpur, Atsushi Tomiyama in Hanoi and Takahito Fujiwara in Tokyo contributed to this story.

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