The Straits Times Index (STI) has been extending its losses over the past month as investors continue to take profit ahead of key events. The STI fell from 3,346.02 to 3,262.61 last Friday (25 Aug 2017) as it recorded a monthly loss of 2.5%.
Moving forward, the STI looks to be heading downwards in the month of September as markets continue to be impacted by geopolitical risk from North Korea as well as uncertainty over Donald Trump’s administration.
So where should investors be putting their dollar to make a comeback from August’s month of lower returns? Here are four small-cap stocks that analysts are recommending.
1. Raffles Medical Group
Raffles Medical Group recently announced its 2Q17 results, which reflected headwinds that the company is facing.
However, analysts believe that Raffles Medical Group’s significant expansion plans over the medium term would help to buoy share price as the company evolves toward becoming a regional healthcare provider.
Raffles Medical Group management highlighted that it expects its planned hospitals in China to achieve EBITDA breakeven within three years.
The management has also indicated that it is looking to open its Chongqing hospital (operational by 2H18) with around 120 doctors (80 local) and 250 operational beds (50 public).
Daiwa Capital Markets: Raffles Medical Group Limited (SGX: BSL) – BUY; Target Price $1.46
2. SIA Engineering: Riding on tail of SIA
SIA Engineering is setting itself on a good long-term growth trajectory as it stands to be a key beneficiary of three long term trends.
Firstly, analysts note that SIA’s fleet is expected to grow by ~50% over the next decade. That means that there will be more fleet maintenance work for SIA Engineering.
SIA has also been collaborating with original equipment manufacturers (OEMs) like Boeing and Airbus for fleet management services and airframe maintenance contracts respectively.
SIA Engineering is expected to be the lead beneficiary for SIA’s collaboration with OEMs.
In addition, SIA Engineering also embarked on a joint venture with GE Aviation to provide a full range of aircraft maintenance, repair and overhaul (MRO) services for GE90 and GE9x over the next three years.
Lastly, the opening of Terminal 4 in 2H17 will increase maintenance opportunities for SIA Engineering as the number of flights to and from Singapore increases.
Daiwa Capital Markets: SIA Engineering Company Limited (SGX: S59) – BUY; Target Price $4.10
3. Sinotrans: Laggard turning into outperformer on recovery in global trade
Sinotrans is one of the largest logistics company in China. With the recovery in global trade and the shipping industry, Sinotrans stands to be a beneficiary.
The logistics industry looks to be recovering from its trough of the past three years. Analysts expect the recovery momentum to sustain and even extend into 2018 on the back of a global trade recovery.
Given that Sinotrans has been lagging behind its logistics peers, improving sentiment and profitability and the expected industry recovery will drive investor interest in Sinotrans over the next few months.
Daiwa Capital Markets: Sinotrans Limited (HKG: 0598) – BUY; Target Price HK$5.00
4. ThaiBev: Fried chicken and beer combo in the making?
ThaiBev’s subsidiary recently announced the acquisition of Yum Restaurants in Thailand. Upon completion of the deal, ThaiBev will own over 240 KFC stores in Thailand.
According to ThaiBev, KFC is the number-one quick service restaurant brand in Thailand by brand share and outlets.
Analysts believe that the expansion allows ThaiBev to venture further into the food business and enable ThaiBev to further understand Thai consumption trends.
The deal will help ThaiBev move closer to its Vision 2020 plan to diversify and have 50% revenue contribution outside of alcoholic beverages.
RHB Research: Thai Beverage Public Company Limited (SGX: Y92) – BUY; Target Price $1.10