When it comes to investing in stocks, some investors may prefer to invest in small-cap companies as they believe that it gives them the chance to invest in potentially undervalued companies. For the uninitiated, the FTSE ST Small Cap Index is one of the six FTSE ST Index Series. The index is weighted based on market capitalisation and it tracks the performance of small capitalised SGX listed companies. Currently, it accounts for about 12% of SGX market capitalisation.
Despite the challenges of COVID-19 resurgences in the region including Singapore’s Phase 2 (Heightened Alert), the FTSE ST Small Cap Index has generated a 4.8% total return thus far in 2Q2021 (as of 4 June 2021). During the same period, the Straits Times Index (STI) saw a return of 0.7%.
In this week’s edition of 4 Stocks This Week, we look at four of the top-performing companies on the FTSE ST Small Cap Index for 2Q2021 thus far.
iFAST Corporation Ltd. (SGX: AIY)
An established regional fintech player, iFAST Corp (SGX: AIY) is the parent company of one of Singapore’s top financial platforms – FSMOne. Headquartered in Singapore, iFAST Corp is a local pioneer in the Fintech space and has since grown regionally with presence in Hong Kong, Malaysia, China and India.
Continuing iFAST’s growth in profits from FY2020, its profit before tax margin grew by 6.5%, from 29.6% in FY2020 to 36.1% for 1Q2021. Additionally, its 1Q net profit also grew by 142.5% as compared to the same period last year to a new high of $8.82 million in 2021.
Since the start of the year, iFAST share price has gone up about 157%, from $3.25 at the start of the year to $8.35 as of 11 June 2021. Share price over the past year has also gone up by more than 7 times, from $1.13 on 12 June 2020 to $8.35 as of 11 June 2021. Its market capitalisation is currently at $2.31 billion.
Hong Leong Asia Ltd. (SGX: H22)
The trade and industry arm of Hong Leong Group, Hong Leong Asia (SGX: H22) focuses on the manufacturing and distribution of construction materials, diesel engines, rigid packing, and air conditioner systems. Founded in 1941 and headquartered in Singapore, Hong Leong Asia presence can be found in China and Malaysia too.
Despite the tough pandemic environment for the manufacturing and construction industry, Hong Leong Asia still grew year-on-year in FY2020 and maintain its level of profitability. Total revenue grew 9.8% from $4.1 billion to $4.5 billion. Profit After Tax and Minority Interest (PATMI) grew 35.7% from $34.4 million to $46.7 million.
As the world electrical vehicle (EV) appetite continues to grow, China EV sales are slated to reach 40% of total car sales by 2030. In face of the changing regulatory climate in China, Hong Leong Asia has positioned itself to diversify and hedge against its manufacturing diesel unit that accounts for over 90% of its revenue as of FY2020. On 2 June 2021, the company has entered into a strategic partnership with Sunlong Bus to develop electric vehicles.
Since the start of the year, Hong Leong Asia share price has gone up by about 35%, from $0.74 on 4 January 2021 to $1.00 as of 11 June 2021. Its total market capitalisation is currently at about $747.8 million.
Riverstone Holdings Limited (SGX: AP4)
As a glove manufacturing company, Riverstone Holdings (SGX: AP4) grew in tandem with the rise in demand for medical-grade gloves to combat the pandemic. Apart from gloves, Riverstone also manufactures face masks, finger cots and other essential cleanroom and medical consumables.
Based on the latest 1Q2021 report, RS experienced a record net profit of RM$523 million for the quarter. This is also a 57% increase from the previous quarter’s net profit of RM$331 million in 4Q2020.
On 4 June 2021, a COVID-19 cluster occurred at both Riverstone’s manufacturing facilities in Malaysia, Taiping. Due to the temporary closure of facilities, and a 60% limitation on Malaysia workforce, there would be a 2% loss in total glove production capacity. Regardless, Riverstone’s other manufacturing facilities located in Bukit Beruntung (Malaysia), Thailand and China are still operating to meet the growing glove demand.
Despite the COVID-19 cluster, Riverstone stock price has remained relatively stable from 4 June 2021 at $1.38 to this week’s closing price of $1.32. Since the start of the year, Riverstone share price has gone up by about 13%, from $1.17 on 4 January 2021 to $1.32 as of 11 June 2021. Its current market capitalisation is at $1.96 billion.
Sunpower Group Ltd. (SGX: 5GD)
Founded in 1997 and listed on SGX mainboard, Sunpower Group (SGX: 5GD) focuses on manufacturing services and green investments. The company also specialises in the development and manufacturing of pipe supports while providing other services such as thermal power and petrochemical engineering.
In addition, the green investment segment of the business focuses on providing environmentally friendly waste, gas, and energy recovery systems for industrial parks. Sunpower Group currently has 9 operating plants with 3 more underway.
Based on FY2020 Annual Report, its profits continued to grow modestly despite the pandemic situation in China. The company’s total profit after tax and minority interests (PATMI) grew by 7% year-on-year from RMB$352 million in FY2019 to RMB$377 million in FY2020.
As China pushes forward with its carbon-neutral stance in 2060, Sunpower Group expertise in providing clean energy will position it well in China’s regulatory climate.
Closing at $0.835 this week, Sunpower Group share price has gone up by about 9% since the start of the year, from $0.77 on 4 January 2021 to $0.84 as of 11 June 2021. Its market capitalisation is currently at $664.4 million.
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.