Broker: UOB Kay Hian
Date of Report: 2 July 2025

Singapore Small-Mid Cap Stocks: Cash-Rich Companies Poised as Potential Privatisation Targets

Privatisation Trend Remains Strong in Singapore’s Equity Market

Singapore’s small to mid-cap segment is experiencing a surge in privatisation activity, with 15 companies already receiving offers year-to-date, following 18 such offers in 2024. This heightened activity is largely attributed to several factors:

• Undervalued Valuations: Many companies being targeted are trading at or below book value, attracting major shareholders to consider taking them private at attractive premiums.
• Ample Cash Reserves: Firms with high net cash positions relative to market capitalisation offer significant safety margins for investors and acquirers alike.
• Support from New Partners: Fresh capital and strategic backing are often facilitating these takeovers.

Notably, the highest premiums offered in 2024 and 2025 were 174% and 78% above the last closing price for Isetan and Singapore Paincare, respectively. Around 80% of privatisation targets traded near or below book value, making attractive valuations the main driver for offers.

Screening for Cash-Rich and Deep Value Stocks

UOB Kay Hian conducted a screening exercise to identify companies with net cash exceeding 35% of their market capitalisation. This yielded a list of 19 companies viewed as deep value, with significant margins of safety and potential for re-rating. Such companies are likely to benefit from the Monetary Authority of Singapore’s S\$5 billion Equity Market Development Programme (EQDP), which aims to improve market liquidity.

Top Cash-Rich Stocks Under Coverage

• China Sunsine (CSSC SP)
  • Share Price: S\$0.545
  • Target Price: S\$0.63
  • BUY recommendation
  • 2025F ex-cash PE: 1.7x
  • Dividend Yield: 5.3%
  • Net cash is 71% of market cap as of 1H25
  • Ex-cash, trades at 6.7x 2025F PE – highly undervalued for a global leader in rubber accelerators with annual earnings above S\$70m
• Valuetronics (VALUE SP)
  • Share Price: S\$0.73
  • Target Price: S\$0.83
  • BUY recommendation
  • 2025F ex-cash PE: 3.5x
  • Dividend Yield: 6.3%
  • Net cash is 60% of market cap (FY3/25)
  • Ex-cash, trades at 10.3x FY3/26 PE—over 30% discount to Singapore manufacturing peers despite strong dividend and active buybacks

Other Notable Cash-Rich Companies Identified

Comprehensive List of Cash-Rich Companies (Net Cash >40% of Market Cap)

Recent Privatisation Transactions: A Closer Look

The following table highlights recent privatisation deals, illustrating the generous premiums and the prevalence of net cash-rich targets:

Valuations and Recommendations

• China Sunsine: BUY, target price S\$0.63, based on 7.5x 2025F PE (1SD above mean PE). Catalysts: higher earnings/dividends or takeover offer.
• Valuetronics: BUY, target price S\$0.83, based on 11x FY26 PE (1SD above historical mean). Catalysts: earnings surprises, dividends, takeovers.

Outlook: Why Cash-Rich Stocks Remain Attractive

Cash-rich companies with robust dividend yields stand out for their ability to weather downturns and attract privatisation interest. The ongoing presence of deep value, underappreciated stocks on the Singapore Exchange, combined with improved market liquidity initiatives, creates fertile ground for further re-rating and takeover activity. Investors and analysts should pay close attention to companies with high net cash positions and consistently strong yields, as they are likely to remain at the forefront of M&A and market interest in the coming quarters.

Contact Information

• Analyst: John Cheong
• Email: [email protected]
• Phone: +65 6590 6623