Small Mid Cap Monthly - DBS Research 2016-06-15: The hunt for GARP

Small Mid Cap Monthly - DBS Research 2016-06-15: The hunt for GARP JAPFA LTD UD2.SI CITYNEON HOLDINGS LIMITED 5HJ.SI MM2 ASIA LTD 43D.SI JUMBO GROUP LIMITED 42R.SI ARA ASSET MANAGEMENT LIMITED D1R.SI

DBS Group Research - Small Mid Cap Monthly: The hunt for GARP

  • Our picks outperformed the market once again, top BUYs gained 13% over the last four weeks, led by mm2 Asia (+22.7%), while the sell call on Nam Cheong (-5.5%) also worked out
  • We add new initiations Cityneon and Jumbo, as well as ARA Asset Management to our top picks. Japfa and mm2 Asia are kept as well
  • Most of our top picks also offer Growth At a Reasonable Price (GARP), further underlining our confidence in them as conviction ideas
  • Equity Explorer: UG Healthcare


Top picks for May performed firmly; three new picks added for June. 

  • Our top picks continue to perform, as the BUYs gained 13% on average since our last issue. 
  • Meanwhile, our sell call on Nam Cheong also worked out, as the counter fell 5.5%. 
  • Our new picks for June include Cityneon, whose scalable business model with low execution risk appears attractive, and believe that the expansion of new stores will underpin growth for Jumbo. 
  • We also like ARA Asset Management, for its scalable business and ample firepower to grow its AUM through the launch of new funds or acquisitions from its REITs.


Looking for Growth At a Reasonable Price. 

  • While the Singapore market offers barely any growth on an overall basis (the projected earnings growth for STI is 2.2% in 2016), there are still SMC names that are projected to record firm earnings growth. 
  • With market conditions still uncertain, investors would do well to look for stocks that offer Growth At a Reasonable Price (GARP). Under these screens, mm2 Asia, Cityneon, Jumbo Group and Japfa, all of which are among our top picks this month, also qualified as GARP ideas.


Equity Explorer: UG Healthcare. 

  • Owing to its dual platforms of manufacturing and distribution, UG Healthcare could benefit from a greater shift in pricing and bargaining power to distributors, as competition among glove manufacturers is expected to heat up ahead. However, prospects for the group should ultimately boil down to the execution and delivery of their longer-term plans.


SMC Radars: 

  • We also feature CNMC Goldmine, which is engaged in the exploration to production stages of gold dorés and Straco Corp, whose attraction in Shanghai could benefit from the spillover of tourists with the opening of Shanghai Disneyland.




Paul YONG CFA DBS Vickers | Singapore Research Team DBS Vickers | http://www.dbsvickers.com/ 2016-06-15
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 1.03 Same 1.03
BUY Maintain BUY 1.10 Same 1.10
BUY Initiate BUY 0.75 Same 0.75
BUY Initiate BUY 0.68 Same 0.68
BUY Initiate BUY 1.76 Same 1.76


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