Small and mid-cap firms hope Value Unlock measure will boost understanding of their businesses

[SINGAPORE] Despite solid fundamentals, many small and mid-cap companies listed here bemoan that their true value is underestimated by the market.

With newly announced measures from the Monetary Authority of Singapore (MAS) review group, these firms hope to bridge the gap between their performance and how the market perceives them – potentially leading to better market valuations and stronger investor confidence.

This is where a cornerstone of the new measures, the Value Unlock programme, aims to help by providing smaller firms with additional resources and tools to better reach investors and boost shareholder value.

Lack of understanding of the business model

Francis Chang, group chief executive and executive director of upstream oil and gas company RH Petrogas Ltd, pointed to the lack of familiarity with the company’s business model.

“Our business of exploration and production is quite different, and in a market that has less exposure to pure-play commodities businesses, it is challenging to attract attention from analysts and investors,” he said. He added that other Singapore Exchange (SGX)-listed companies with exposure to oil and gas generally operate in offshore and marine services.

Nordic Group , a systems integration solutions provider focused on the technical and sophisticated engineering sector, sees the programme as particularly valuable in helping investors appreciate the group’s diverse presence across marine, semiconductor, and defence industries.

It noted that support that helps it contextualise its engineering capabilities across industries and highlight the resilience of its complementary business model, such as combining turnkey engineering solutions with long-term maintenance services, would be valuable in deepening investor understanding.

The main challenge is often being able to articulate a clear “equity story” for nascent, high-growth, or niche business models, said a spokesperson for investment bank Evolve Capital, which has been involved as a sponsor/manager for SGX listings.

“This is where strong investor relations can become a value-creation function, (and) not merely a compliance function: by translating the company’s business model, value-creation levers and growth thesis into measurable drivers,” added the spokesperson.

Small and mid-caps struggle with investor relations

Even though the business models of some of the firms need to be better understood, some of the small and mid-caps do not focus much on investor relations. This is partly due to a lack of resources.

Dr Louis Ooi, CEO of testing and certification services provider LMS Compliance , said that sustained investor engagement remains a challenge for many SGX-listed firms, particularly smaller caps.

Jackie Soh, CEO of interior fit-out company Lincotrade , noted that this is where the Value Unlock initiative could potentially motivate “smaller-cap companies to put out more info and undertake more market-outreach activities to targeted investors”.

“No matter how good a product or company is, people cannot buy it if they do not know it exists,” he added.

He admitted that his firm has sometimes overlooked the importance of consistent investor engagement while focusing on day-to-day operations.

Other challenges include “limited resources and access to broader platforms, which can constrain the visibility (it) aim(s) to build among the investment community”, he said.

Similarly, Haim Brosh, CEO of life sciences innovation commercialisation company The Trendlines Group , sees his firm “face challenges that include limited investor engagement, little to no media and analyst coverage, and other market barriers”.

Integrated marine logistics company Marco Polo Marine hopes the investor relations initiatives will help it “sharpen how (its growth) strategy is presented to the market”, said its CEO Sean Lee.

“When investors have clearer visibility on our direction and execution, it generally supports better understanding of the value we aim to create,” he added.

Considering grant applications

The Value Unlock initiative comprises S$30 million in funding across two grants, Equip and Elevate, from MAS’ Financial Sector Development Fund.

Lincotrade intends to apply for any grants that are relevant, while construction service provider Reclaims Global is consulting its sponsors and considering applications for both grants.

Others, such as property developer Wee Hur Holdings , are monitoring the roll-out of both grants. As more details become available, it will assess how the programme could support areas such as investor relations, corporate strategy, governance, and capability-building.

“While it is still early, we are open to exploring how the grants may align with our growth priorities and help us further strengthen engagement with the investment community,” said Wee Ping Goh, chief investment officer at Wee Hur Holdings.

The grants offer co-funding for investor-relations training, strategic advisory, and financial-management enhancements, noted Dr Ooi of LMS Compliance.

“The structured support is particularly beneficial for Catalist companies looking to professionalise investor-relations functions, elevate strategic communication, and strengthen management capabilities without placing undue strain on operational budgets,” he added.

Showing that these efforts can pay off

Efforts to boost investor relations are already under way at small and mid-cap companies.

Wee Hur Holdings has been progressively strengthening its investor communications by expanding engagement channels, including earnings calls, analyst briefings, targeted investor meetings, and curated access days.

It also works closely with research houses and other professional service providers to broaden investor reach and enhance communications.

These efforts appear to have paid off; its share price as at Thursday (Dec 4) showed that it is up some 69 per cent in the year to date.

Tan Kok Huat, CEO of Reclaims Global, told The Business Times that it has meanwhile engaged an investor relations firm to coordinate non-deal roadshows, allowing the company to meet and follow up with investors, while also arranging media initiatives to share its story through local channels.

Its share price is up more than 50 per cent this year.

Thakral Corp also meets investors and sell-side analysts regularly.

“We believe strongly in investor relations and have always been transparent and proactive in our investor engagements and disclosures,” shared Inderbethal Singh Thakral, CEO at the investment and lifestyle group.

Its share price has more than doubled this year, surging close to 150 per cent.