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Small Cap Gem Series: 4 Small/Mid Cap Winners In The Making

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In the second part of this two part series, we focus on highlighting four more small/mid cap gems that have the potential to become winners in the near future.

Investors Takeaway: 4 Small/Mid Cap Winners In The Making

  1. Sunpower Group


Source: Sunpower Group

Sunpower Group (Sunpower) is worth paying attention to. A one-stop solution provider for energy conservation, waste-to-energy and renewable energy projects, Sunpower specializes in the design, R&D, and manufacture of energy conservation products in China.

Green Investment

Sunpower recorded a strong core net profit growth of 117.5 percent year-on-year, thanks to a strong green investment segment. Its manufacturing revenue also grew by around 40 percent to underpin an improvement in gross margin and operating cash flow. Moving forward, the management has earmarked its green investment segment as the key driver for the group. A continued ramp up of existing projects (e.g. Changrun, Lianshui, Shantou) will further contribute to Sunpower’s earnings in 2019.

BUY, TP $0.88; Current share price $0.545

  1. Raffles Medical Group

Raffles Medical Group (Raffles Medical) announced FY18 net profit of $71.1 million, a 0.4 percent improvement year-on-year. This was slightly above UOBKH’s expectations and the group also declared a final dividend of $0.02 per share.


Raffles Medical recently launched the Raffles Connect platform that allows patients to access healthcare services for treatment and healthcare needs. In addition, patients can consult a doctor via a 24/7 tele-consultation service. While Telehealth is still in its infancy stage in Singapore with platforms largely piloted by startups, it could become the norm in the future. The venture of Raffles Connect platform gives Raffles Medical a good head start.

BUY, TP $1.30; Current share price $1.09

  1. Amara Holdings

Following a recent management update from Amara Holdings’ (Amara) management, RHB has given a bullish recommendation to Amara Holdings (Amara). One of the key highlights for Amara in 2019 will be the stronger contribution coming from Amara’s Shanghai mall and office. This follows a recent office leasing contract signed in January 2019, where Amara leased out all its Shanghai office space. Given the development in the property investment and development segment, RHB is raising FY19F net profit by 12 percent to reflect the positive operating gains.

BUY, TP $0.88; Current share price $0.480

  1. Koufu

Among the listed F&B players in Singapore, Koufu is the most profitable company. According to UOBKH, it appears that the market has been overlooking the potential of Koufu’s growth drivers and its highly defensive business model.

A Defensive Cash Cow

Koufu’s main business is in managing and running food courts and coffee shops to provide competitively-priced meals. Today, it is the second largest food court and coffee shop operator with a brand affiliation among heartlanders. This makes it a defensive cash cow backed by a leading market position, strong brands and sticky tenants.

Set For Steady Growth

UOBKH believes that Koufu is on a steady path of growth as it completes the enhancement initiatives of Rasapura Masters and a pipeline of five new food courts in 2019. The faster roll-out of Koufu’s R&B Tea and Super Tea will also help Koufu gain a foothold amongst younger consumers.

UOBKH notes that at Koufu’s current valuation, the stock is a steal for a company with solid niche leadership in a potential high-growth high-margin business.

BUY, TP $0.95; Current share price $0.805

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Small Cap Gem Series: 4 Exciting Small Caps That Are Set For A Year Of Growth

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