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DBS Research: 3 Mid-Small-Caps to Consider Given Lacklustre 2Q
Source: Straits Times Index, Bloomberg
With companies announcing lacklustre 2Q earnings, the market outlook is far from optimistic. Weak earnings by companies and strong headwinds in the global economy have proven to be a drag as investors see a volatile year.
Analysts from DBS Research came up with a new research report which focuses on small- and mid- cap stocks that might outperform in the second half of the year. The preferred stocks have the potential to grow through acquisitions.
Below are the top three small- and mid-cap stocks that have the highest upside from the list.
1. ARA Asset Management
Source: ARA Asset Management, Bloomberg
Having close to $30 billion of assets under management, the Li Ka Shing-backed ARA Asset Management (ARA) is one of the largest real estate managers in Asia. Based on its management, it sees opportunities in deploying capital into key cities of Australia, China and Korea.
Expertise in the local real estate market by the various heads will allow ARA to leverage its expertise and on ground knowledge for growth. In addition, ARA has sufficient firepower in its war chest as the REITs under its management have low debt levels. Based on estimations, these REITs have more than $5 billion in acquisition capacity to spend on expansions.
Analysts from DBS Research gave ARA a “Buy” call with a target price of $1.76.
2. Singapore O&G
Source: Singapore O&G, Bloomberg
As a new star in Singapore’s healthcare industry, Singapore O&G (SOG) has seen a remarkable performance since its IPO on June 2015. From its IPO price of just $0.25, the stock has risen in an amazing pace to the current $1.16, which is equivalent to an increase of more than 360 percent. SOG is tapping on the private healthcare market in women’s health. In fact, 57 percent of babies in Singapore are delivered through the private sector.
SOG has been aggressively growing its market share in the obstetrics and gynaecology services (O&G), which currently accounts for 60 percent of the group’s revenue, through the recruitment of new doctors. It has also been diversifying its business through the acquisition of dermatology and aesthetic businesses. The management has plans to expand into paediatrics in 2017.
Analysts from DBS Research gave SOG a “Buy” call with a target price of $1.50.
3. mm2 Asia
Source: mm2 Asia, Bloomberg
Famous for being the production house for local production, Ah Boys To Men, mm2 Asia (mm2) has been performing well. The catalyst listed stock was offered at $0.25 last year and risen to the current $0.71. mm2 has been aggressively growing its presence in Singapore, Taiwan and Hong Kong as it continues to secure film deals from China and South Korea.
It has since acquired five cineplexes in Malaysia and holds a 51 percent stake in UnUsUal Group. In June, mm2 announced the possibility of a separate listing of UnUsUal which might bring a special dividend to investors.
Analysts from DBS Research gave mm2 a “Buy” call with a target price of $0.83.
