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Singapore Small-Mid Cap Stocks: Cash-Rich Privatisation Targets & Top Value Picks for 2025

Posted on July 2, 2025 at 4:27 pm (GMT+8)

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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

Company Ticker Share Price (S\$) P/B (x) Net Cash to Market Cap (%) Notes
Avarga AVARGA SP 2.78 0.71 75 Trades at 29% discount to book; major shareholder takeover attempt in 2024 increased stake to 87%
Samudera Shipping SAMU SP 0.73 0.61 71 39% discount to book; 5x 2024 PE; 9.3% dividend yield
CH Offshore CHO SP 0.016 0.36 56 64% discount to book; major rights issue in June 2025; now with S\$17m net cash vs S\$32m market cap; parent Baker Technology holds S\$95m net cash

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

Company Ticker Share Price (S\$) Market Cap (S\$m) PE (x) P/B (x) Dividend Yield (%) ROE (%) Net Cash to Market Cap (%)
China Aviation CAO SP 0.91 783 7.9 0.63 4.1 8.1 81.3
Stamford Land STL SP 0.44 653 20.0 0.75 1.1 3.8 77.8
Avarga AVARGA SP 2.78 253 13.2 0.71 0.0 6.8 75.4
Samudera Shipping SAMU SP 0.835 449 5.0 0.61 9.3 12.5 71.2
China Sunsine CSSC SP 0.545 520 6.9 0.70 5.5 10.4 70.9
Aztech AZTECH SP 0.565 436 6.2 1.28 26.5 20.6 63.7
Bund Center BCI SP 0.36 273 20.1 0.74 3.9 3.7 61.8
Valuetronics VALUE SP 0.73 296 10.8 1.35 5.9 11.9 59.8
UOA UOA SP 0.45 764 10.9 0.51 4.7 5.0 59.0
Bukit Sembawang BS SP 4.02 1,041 9.1 0.65 4.0 7.3 56.0
CH Offshore CHO SP 0.015 32 13.1 0.36 0.0 2.8 55.7
Yangzijiang Fina YZJFH SP 0.74 2,576 8.5 0.63 4.7 7.7 53.9
PC Partner PCPG SP 1.18 458 10.1 0.92 2.1 9.3 53.6
Straco STCO SP 0.415 355 13.0 1.31 4.8 10.1 51.3
Boustead SP BOCS SP 1.43 703 7.3 1.15 3.8 17.5 46.4
SBS Transit SBUS SP 2.79 872 12.4 1.21 10.3 10.0 44.1
OKP OKP SP 0.855 262 7.8 1.41 2.9 19.4 41.4
Hong Leong Asia HLA SP 1.60 1,197 13.6 1.18 3.8 9.1 39.9
HRnetgroup HRNET SP 0.685 671 15.1 1.77 5.8 11.8 38.5

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:

Target Offer Price (S\$) Market Cap (S\$m) Premium to Last Price (%) P/B Net Cash to Market Cap (%) Notes
Isetan 7.20 117.2 173.8 1.1 36.4
Best World 2.56 761.9 – 1.3 70.4
Great Eastern 25.60 12,173.8 36.9 1.5 51.8
RE&S Holdings 0.36 93.8 56.5 2.3 -60.2
Ossia Int’l 0.145 30.3 20.8 0.5 28.9
Second Chance 0.300 199.5 39.5 0.7 -30.2
Silverlake Axis 0.360 754.4 – 2.4 13.8
Dyna-Mac Holdings 0.670 517.6 35.4 1.7 41.7
AMOS Group 0.070 11.0 32.1 0.2 -120.8
5E Resources 0.380 52.2 20.6 1.4 25.3
Broadway Industria 0.197 89.1 7.1 0.9 13.5
Avarga 0.250 213.5 22.0 0.6 -9.3
Sin Heng Heavy Machinery 0.580 59.3 6.4 0.6 70.9
Singapore Paincare 0.160 24.1 77.8 1.1 -19.9

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.

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