After all, Singapore, if it wants to truly be a financial hub for Asia, cannot claim to be a leader in the financial industry without a vibrant stock market. Furthermore, a lot of other bourses in the region — including Japan and South Korea — have already undergone their reforms by putting their government-linked companies (GLCs) and sovereign wealth funds in the market, he points out.
“Things like that do generate a lot of investors’ interest, because as a foreign investor looking at markets in the region, you have alternatives,” says Loh. “If another market is giving you better returns, you can go to that market.”
Delistings due to buyers ‘taking advantage’ of ‘lull period’
Yet, while the MAS is still working on its review proposals, a growing line of Singapore’s listcos are rushing to take themselves off the market. As of June 19, eight companies have already been delisted while 13 companies have announced their intentions to go private this year alone. The MAS is expected to shortlist fund managers for the $5 billion by the third quarter this year and put forward a second set of measures to strengthen the Singapore equities market by August.
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To Loh, the delistings may be occurring because buyers, whether they are external parties or existing major shareholders of the companies themselves, are “taking advantage” of this “lull period” when the target companies are still inexpensive. When the $5 billion from MAS is deployed, prices could rise, potentially making any privatisation more costly.
“What we don’t want to see is good companies being taken out of the system,” says Loh. “We don’t want to see opportunistic privatisations and delistings just because some of these investors or majority shareholders see that there is this wave of liquidity coming through, potentially jacking up their valuation, and they want to get in front of that and privatise their company before that happens.”
Illustrating his point, one example of a very “cheap” delisting was the offer for Sinarmas Landmade by Lyon Investments at an “incredible” price over net asset value (NAV) of 0.36 times.
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“We struggle to understand the phrase ‘not fair but reasonable’ issued by the IFA [independent financial advisors],” says Loh.
Due to the lack of liquidity, foreign companies also had the opportunity to privatise Singapore-listed companies at very low valuations, which was “worrying”, he adds. One such example was the delisting of Dyna-Mac Holdings, which specialises in the engineering, procurement, construction and commissioning of offshore modules and facilities.
In September 2024, Dyna-Mac, which was trading at 49.5 cents, representing a P/E multiple of 6.5 times, received a tender offer from Korean conglomerate Hanwha Group, which is trading at a P/E multiple of 22 times. “The valuation disparity does seem rather too large,” says Loh.
“Dyna-Mac is a world-class company. At the time, they had very, very good management; CEO Lim Ah Cheng had done a very good job turning that business around. He’s very vocal, very forthright… and he was very good at communicating what the strategy was,” Loh opines. “To see Dyna-Mac having been taken out at such a low P/E was disappointing.”
For Singaporean assets to be sold at such expensive valuations, it begs the question as to why valuations were so low to begin with.
In Loh’s view, this is attributed to a lack of interest in the Singapore market due to liquidity support, a lack of appreciation, as well as market-maker incentives, which could have led to higher valuations for a company like Dyna-Mac.
There also has to be a higher bar for what IFAs deem as “fair” takeover offers as well as accountability for these same IFAs offering “rubber-stamped assessments”.
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Coming back to market
On the other hand, even though the outlook for the Singapore market has picked up, with analysts like Loh increasing their Straits Times Index (STI) targets, companies are not listing on the local bourse yet.
“It’s all about valuations,” says Loh. “If the founder of a company can go to foreign bourses that offer higher IPO valuations, it is in their best self-interest to do so given that they would have had poured many years of blood, sweat and tears into their business and want to see a return for their efforts.” Per his report dated May 27, Loh has an increased STI target of 4,054 points, up from 3,720 points as at the end of 2025.
Based on experience, Loh sees foreign bourses, which offer higher P/E valuations that are often in the mid-teens, as “clearly more attractive” compared to the high-single digit to low-teens that the Singapore small- and mid-cap sector commands on average.
In addition, some of these foreign exchanges have large government-related funds that can take strategic stakes at the pre-IPO stage. Such funds also often actively trade these stocks once they go public, which can provide and generate liquidity, which is the “essence of a strong stock market”, he adds.
Ahead of the MAS’s $5 billion fund, formally known as the EQDP, Loh believes the proposed measures will “definitely help”.
Since the measures were announced in August 2024, liquidity on the SGX has “clearly increased”, which indicates higher investor interest in local companies, says Loh.
That said, it’s all about the execution of the EQDP and getting that $5 billion into the market in an “orderly manner”, says Loh. “As we had stated in our [May 27] report, we certainly hope that market makers will be allowed back into the ecosystem and that the $5 billion is not just a one-off event but perhaps a multi-phase approach to re-energising the market.”
Before the EQDP, the Singapore market was seen as a “safe place” to put one’s money in, especially in times of policy uncertainty. The Singapore bourse was also for investors looking to generate income through dividends, notes Loh, who pointed out that the three local banks — DBS Group Holdings, Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank(UOB) — make around 50% of the STI and pay generous dividends of around 5% to 6%. Singapore REITs, with their regular distributions, are also seen as a “safe income-generating sector”.
Yet, with the EQDP and MAS’s “public pronouncements” that it will focus on liquidity and non-index stocks, there is this new perception that non-index stocks within the Singapore bourse will be more interesting, says Loh.
In his report, Loh noted that the $5 billion fund will boost non-index mid-caps and cited names such as Centurion Corp, China Sunsine, ComfortDelGro, CSE Global, Food Empire Holdingsand Valuetronicsas some of his top picks. The rest of Loh’s picks include Frencken Group, Hong Leong Asia, Oiltek International, PropNex, Sheng Siong Group, SIA Engineering and Valuetronics.
These companies are known for their “quality management, earnings growth, robust business models and largely domestically-focused revenue streams”, Loh wrote on May 27. “We note that in our universe of small-/mid-cap coverage, 19 stocks are in a net cash position with their net cash ranging from 6%–73% of their market capitalisation.”
During our interview, Loh added that a lot of “previously unloved or overlooked sectors” have become “a lot more visible to the market”. Investors should also look at companies that have high levels of cash on their balance sheets. Once the cash portion is removed, these companies are trading at low-single-digit to mid-single-digit P/Es, which makes any downside “much, much less”. As such, the risk-reward ratio becomes “a lot more favourable to the investor”.
“When you look at some of the businesses some of these companies are in, the competitive moats that they’ve been able to build over time, strong management, then it becomes a very compelling ‘buy’ story for some of these companies,” he says.
On sectors to watch, Loh likes the construction sector, which is fast becoming a consensus call. Analysts like the sector due to the multi-year spending taking place. Within the public sector, Singapore has started the construction of the massive Changi Airport Terminal 5, the North-South Corridor, new MRT lines, as well as a steady supply of HDB flats. There is also a “reasonable amount of interest” in private residential.
At the same time, property stocks will also benefit from the boom. Centurion’s business, which includes purpose-built workers’ accommodations, is deemed a quasi-property play, while PropNex is another beneficiary of the property theme, levered to the residential property sector. Loh notes that PropNex’s earnings is tied to the property market, as its agents help market new private residential launches, and also handle resale transactions of both private and public properties. The agents help handle leasing too. By the nature of this business model, PropNex is asset-light, and therefore from investors’ point of view, is a business that generates “extremely high” return on equity (ROE).
Developers, which may also be seen as a property play, are mostly trading at huge discounts to valuation, and as such, Loh is not sure whether they’re able to get out of that value trap in the short term.
“They’ve got a lot of value on the balance sheet. If you look at the RNAVs [revalued net asset values] of a lot of these companies, it’s very, very high versus what the current market cap is. I guess it’s going to take time for them to show that they will actively manage their properties and recycle capital. I think that’s probably what is needed,” he adds.
On the flip side, investors should avoid sectors that may be affected by ever-changing US policies. For instance, after the Liberation Day tariffs were announced, some of the tech counters with China and Vietnam exposures would have been affected.
More recently, Section 899, which allows the US to increase existing levies for countries with “unfair foreign taxes”, would affect companies that have assets or “significant levels of business” in the US. One readily identifiable sector that could be negatively impacted would be REITs with US assets [such as] Manulife US REIT, Prime US REIT, United Hampshire US REITand Keppel Pacific Oak US REIT, Loh adds.
Choosing stocks for coverage
When it comes to choosing stocks to cover, Loh takes on a pragmatic approach. “There are stocks that you have to cover and then there are those that you want to,” he says.
Stocks that have to be covered include the large-cap index stocks that will see the most interest from institutional and retail clients, although there are some gems within these large-caps as well.
One such example is Sembcorp Industries, which has seen a sixfold rise in its share price in the past few years as it gradually tries to reposition its business from brown to green.
Among the non-index stocks, companies that are “very visible” to the Singaporean investor, such as ComfortDelGro, is another example. Within the small- and mid-cap sector, Loh looks for companies that have a mix of strong management, good growth prospects, a favourable industry background and a domestic focus, which is increasingly important in a world with trade and tariff policies “that seemingly change by the hour”.
Within these small- and mid-caps, Loh also looks for companies with leaders who are “good stewards of money”, have good capital management, return excess capital to shareholders and have a clear business model.
Loh is very clear that he meets with the management of the companies he covers. “I would say I’ll be more comfortable if we met face-to-face. Nowadays, over Zoom or Microsoft Teams is fine too, but we’d rather meet face-to-face with them.”
“It’s very important that we get a sense that the company has a good strategic direction, that management knows what they’re doing, and that they are able to enunciate that strategy properly to us and investors,” he adds. “I think willingness to meet with us and willingness to meet with investors is also very important, because it’s all about marketing your story, right? You need to be able to tell the market you know what direction you’re going in and that you are confident that you can execute.”
Over the next few months, Loh is “confident of Singapore’s markets”. In addition to his STI year-end upgrade, Loh also expects earnings for the index stocks to grow by 1.2% to 1.5%. For the stocks within UOB Kay Hian’s coverage, the brokerage is expecting earnings growth of slightly over 2%.
“On that basis, we think we’re still pretty okay,” he says, adding that the Singapore market has done well compared to its Asean names such as the Jakarta, Thailand and Kuala Lumpur bourses.
“We are a relatively high dividend-paying market, we’re trading at about 12 times P/E. We generate 5.5%, 5.6% yield for this year’s forecast. ROEs have been going up the past couple of years, so that’s definitely good to see.”
