Why Invest In Strong Brands Matter?
“ Companies that successfully built strong brand identities are there to stay.”
Nestle. Dutch Lady. Tenaga. Mr DIY. Maybank. 7-Eleven. Ajinomoto. Panasonic.
Recognize all the brands above? These are some of the successful companies that possessed very strong branding in Malaysia. Their products and services are something we are familiar with and we often see them almost everywhere. Some of them are even essentials, that we use it almost every day in our daily lives.
And because of that, they manage to continuously grow over time and eventually became big, multinational companies.
Now that they are listed in the Bursa Exchange (our local share market), what if I tell you that you could own a piece of these companies? Sounds cool right?!
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The question is; Why should you put my money into strong brand companies? We take a look at 4 reasons why.
They are well-established.
Some of the companies mentioned above have made their mark in Malaysia for over very long time – Nestle began in Malaysia back in 1912!. They managed to withstand the test of time, and often manage to recover and come back stronger from events like recessions and economy crisis.
They have loyal customer base.
Customers are essential to as a source of revenue. Without customer using your products or services, it’s difficult to generate consistent income. In the case like Tenaga Nasional, it’s almost impossible not to have customers as they are the only local company to distribute and transmit electricity in Malaysia.
They pay dividends.
Dividends are rewards in cash (sometimes in shares) back to the shareholders who have faith in the company and considered as a sustainable source of passive income. For example, Maybank used to reward up to RM500 of dividends per year if you own 1,000 units of their shares.
They are financially strong.
Companies with strong brands tend to record healthy and strong financial results. These often reflected on their share prices. Ajnomoto is currently priced at above RM15 (at time of writing) and their financials have been recording a net profit since 2011.
As time is always changing rapidly, business models that work now may not be relevant in the future. Therefore, strong brands do not guarantee a sure-win investment. As an investor, you need to always keep track of how your company is performing – whether they are staying competitive in the market or not.
