Singapore’s small and mid-caps: Investors hunt for ‘hidden gems’ as analysts eye privatisation candidates, structural plays

[SINGAPORE] The hunt for Singapore’s next top market darling in the small and mid-cap (SMID) space is shifting gears. 

SMID stocks are poised for further positive rerating in 2026, supported by a conducive macroeconomic set-up and local equity market reforms, analysts from OCBC said in a Monday (Jan 19) research report. 

Amid stretched valuations from pre-emptive positioning, some investors may be starting to look beyond the iEdge Singapore Next 50 Index for “hidden gems”, they added. 

The next wave of winners may be found among potential privatisation candidates and companies with robust fundamentals or “structural” order book visibility.

The privatisation screen

OCBC highlighted that while market reforms such as the Equity Market Development Programme (EQDP) are boosting liquidity, some investors are searching for value in stocks that remain structurally ripe for privatisation.

The research house conducted a screening exercise to identify such candidates, focusing on companies with undemanding valuations, lower trading liquidity, net cash positions and high ownership concentration.

The screen flagged several notable names, including GuocoLand , Hong Leong Asia , PropNex , China Aviation Oil , Hour Glass , First Sponsor and SBS Transit .

However, OCBC highlighted four companies that passed both the privatisation screening and a separate fundamental screening for robust profitability: Ho Bee Land , China Everbright Water , Samudera Shipping and Indofood Agri Resources .

While the four are not currently under OCBC’s coverage, the analysts suggested they “warrant closer monitoring” given their unique combination of fundamental strength and strategic optionality.

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OCBC warned that privatisation outcomes are “inherently uncertain”, and investors relying solely on this angle risk being locked into positions for extended periods.

For investors sticking to covered stocks, OCBC’s preferred picks remain Boustead Singapore , CapitaLand India Trust , NetLink NBN Trust and Parkway Life Reit , as noted in an earlier report on Jan 14.

Quality trumps liquidity

While OCBC seeks corporate action potential, analysts from UOB Kay Hian (UOBKH) look for quality, structural growth and long-term visibility in SMID companies. 

Following the Singapore Equities Forum on Jan 9, UOBKH analysts highlighted that for SMIDs, “order book visibility, structural growth drivers and quality trump liquidity concerns”.

“Companies with multi-year revenue coverage, particularly in construction, infrastructure and sustainability-linked sectors, are better positioned to deliver consistent earnings growth,” UOBKH analysts wrote in a Jan 16 note.

The brokerage likes the construction sector, citing a “multi-year infrastructure pipeline” including Changi Terminal 5 and MRT expansions that underpin revenue visibility. 

It also pointed to the Johor-Singapore Special Economic Zone and the Johor Bahru-Singapore Rapid Transit System as structural catalysts that will drive upside for select property and construction players.

UOBKH’s top SMID picks are Food Empire , Valuetronics , Riverstone and China Aviation Oil .