Broker: UOB Kay Hian
Date of Report: Thursday, 18 September 2025

Singapore’s Mini STI Index: Unlocking Value in Small and Mid Cap Stocks

Introduction: A New Chapter for Singapore’s Equity Market

Singapore Exchange (SGX) is set to launch a groundbreaking “Mini STI Index,” designed to track the performance of the next tier of large and liquid companies outside the well-known Straits Times Index (STI). This move, coupled with broader value-unlocking measures from the Monetary Authority of Singapore (MAS), is poised to shine a spotlight on Singapore’s vibrant small and mid cap (SMID) equity segment. Investors can expect heightened visibility, increased liquidity, and a valuation uplift for many underappreciated names.

Strategic Rationale: Why the Mini STI Index Matters

– The Mini STI Index aims to showcase Singapore’s broader equity market, focusing on companies with market capitalizations above S\$1 billion, free float above 15%, and sufficient liquidity. – Anticipated benefits include a re-rating of mid cap stocks, with positive spillover effects to smaller companies. – MAS is championing stronger investor engagement and measures to help firms unlock shareholder value, especially those with high cash reserves or valuable assets (such as high-ROE businesses, property, or land holdings).

Screening for the Mini STI: Methodology and Results

To identify potential constituents, companies were screened using three main criteria: – Market capitalization greater than S\$1 billion – Free float of more than 15% – Liquidity exceeding 0.1% of 52-week average daily volume as a percentage of free float
This process yielded a list of 39 companies likely to be included in the upcoming Mini STI Index.

Top Small and Mid Cap Picks for 2025

UOB Kay Hian’s analysts spotlight six companies as top SMID picks, each with compelling growth drivers and valuation appeal.

In-Depth Analysis of Top Picks

Food Empire Holdings

– Strong earnings growth anticipated for 2025, driven by the ability to pass on higher coffee prices and implement strategic initiatives. – Attractive valuation with PE of 18.4x (2025F), dividend yield of 3.1%, and a robust ROE of 19.1%. – Market cap stands at S\$1.37 billion, with a price/NAV of 3.5.

Sheng Siong

– Growth underpinned by record-high store expansion, leading to more revenue contributions in 2025. – Boasts a high ROE of 27.0% and a strong balance sheet. – 2025F PE is 21.3x, dividend yield at 3.3%, and market cap of S\$3.2 billion.

CSE Global

– Well-positioned for significant earnings growth in 2025, benefiting from contract wins in the data centre space. – 2025F PE is 13.4x, with a 3.3% yield and an impressive ROE of 24.1%. – Market cap: S\$522 million; price/NAV: 2.1.

China Sunsine

– Global leader in rubber chemical accelerators, trading at a deep discount to peers. – Net cash represents approximately 50% of its market cap. – 2025F PE at 9.9x, yield of 4.3%, and ROE of 9.9%.

Marco Polo Marine

– Poised for an earnings boost from a new fleet of vessels and shipyard expansion. – 2025F PE of 11.2x, dividend yield of 2.7%, and ROE of 12.9%. – Net cash is about 50% of market cap, supporting strong fundamentals.

Valuetronics

– New customer contributions expected to drive performance. – Attractive dividend yield (c.5%) and net cash at c.50% of market cap. – 2025F PE at 12.3x, with a steady ROE of 11.7%.

Comprehensive List of Potential Mini STI Index Constituents

The following table provides a snapshot of other key stocks likely to feature in the Mini STI Index, with their market cap, liquidity, and valuation metrics:

Other Noteworthy Candidates for the Mini STI

– Key REITs: Keppel REIT, Suntec REIT, NetLink NBN Trust, CapLand Ascott Trust, PLife REIT, Lendlease REIT, ESR REIT, OUE REIT, and others. – Consumer & Services: Sheng Siong, Raffles Medical, ComfortDelGro, StarHub, SBS Transit, PropNex, Hong Leong Asia. – Industrials and Commodities: Golden Agri-Res, Bumitama, BRC Asia, Food Empire, China Aviation, Riverstone. – Financials: UOB Kay Hian, iFAST. – Others: Centurian, Far East HTrust, CDL Htrust, AIMS APAC Reit, NTT DC REIT USD.
Each company in this group brings a unique value proposition, from high free float and robust liquidity to sector leadership or deep value characteristics.

Conclusion: Riding the Next Wave of Singapore’s Equity Growth

The imminent launch of the Mini STI Index and MAS-led shareholder value initiatives mark a pivotal moment for Singapore’s small and mid cap universe. Investors should closely track the evolving SMID landscape, leveraging the opportunities presented by both index inclusion and ongoing value-up measures. The companies analyzed here offer compelling entry points for those seeking exposure to Singapore’s next growth leaders. With robust fundamentals, attractive yields, and improving market visibility, the Mini STI constituents are well-positioned for a re-rating in the coming years.