| SMID Stocks to Watch: Why OCBC Highlights Nordic, CAO, and HLA OCBC Group Research has released an in-depth strategy update on its top Small and Mid-Cap (SMID) equity picks. |
OCBC Preferred Singapore SMID bottom-up picks
|
Name |
Last Close |
Fair Value |
P/E FY1 (x) |
P/E FY2 (x) |
P/B FY1 (x) |
P/B FY2 (x) |
Div Yld FY1 (%) |
Div Yld FY2 (%) |
Potential Upside |
|
Boustead Singapore |
1.97 |
2.45 |
13.1 |
11.6 |
N.A. |
N.A. |
3.8 |
4.0 |
24% |
|
CapitaLand India Trust |
1.03 |
1.37 |
12.4 |
11.3 |
0.8 |
0.6 |
8.0 |
8.6 |
33% |
|
China Aviation Oil |
2.14 |
2.48 |
11.8 |
11.0 |
1.2 |
1.2 |
3.8 |
4.2 |
16% |
|
Hong Leong Asia |
2.91 |
4.20 |
15.3 |
13.5 |
1.8 |
1.7 |
1.8 |
1.9 |
44% |
|
Info-Tech Systems Integrators |
1.01 |
1.30 |
13.1 |
12.3 |
5.1 |
4.2 |
3.9 |
4.3 |
29% |
|
Nordic Group |
0.52 |
0.60 |
9.6 |
8.7 |
1.3 |
1.3 |
4.2 |
4.6 |
15% |
|
OUE REIT |
0.36 |
0.40 |
17.1 |
16.4 |
0.6 |
0.6 |
6.4 |
6.9 |
11% |
|
Parkway Life REIT |
3.97 |
4.83 |
21.7 |
21.1 |
1.5 |
1.5 |
4.5 |
4.6 |
22% |
|
Stoneweg Europe Stapled Trust |
1.49 |
1.88 |
10.8 |
10.3 |
0.7 |
0.7 |
8.9 |
9.2 |
26% |
|
Average |
13.9 |
12.9 |
1.6 |
1.5 |
5.0 |
5.4 |
|||
|
Median |
13.1 |
11.6 |
1.3 |
1.2 |
4.2 |
4.6 |
|||
|
Source: Bloomberg consensus, OCBC Group Research estimates, as at 9 Apr 2026 closing prices. |
|||||||||
Nordic Group is a standout in the report. It is a diversified industrial solutions provider that serves essential sectors like marine, offshore, and semiconductors.
OCBC pegs a fair value of SGD 0.60, representing 15% upside from its recent close of SGD 0.52.
- Why OCBC likes it: First, Nordic boasts an order book of SGD 201.9 million that extends all the way through 2028.
A growing share of this comes from recurring maintenance contracts, which provides the company with highly visible and stable earnings.
Second, Nordic is perfectly positioned for the upcoming semiconductor boom.
With giants like Micron investing USD 24 billion in Singapore, Nordic’s water treatment systems are in high demand.
Finally, the defence sector is a huge structural tailwind. Singapore is bumping its 2026 defence budget to SGD 24.9 billion, and Nordic’s subsidiary, Starburst, builds and maintains shooting ranges for the military.
This gives them a slice of government-backed, defensive cash flow without the heavy debt usually associated with prime defence contractors. - The Caution Note: The big semiconductor expansion will take time to reflect in earnings, as Micron’s new facility will not begin operations until the second half of 2028.
Additionally, certain parts of the precision components sector are still facing cautious demand, which poses a near-term uncertainty for Nordic.
| "Management shared that it has been actively evaluating projects that are either complementary to its existing oil assets or SAF-related (to capture growing demand in part due to regulatory requirements). We believe any developments on acquisitions – or a clearer dividend policy – will likely support further re-rating of the counter, especially amidst ongoing market focus on corporate value unlocking activities" -- Ada Lim, OCBC analyst |
China Aviation Oil (CAO) is the largest physical jet fuel trader in the Asia Pacific region.
OCBC pegs its fair value at SGD 2.48.
- Why OCBC likes it: CAO is a proxy for growing Chinese aviation and outbound travel.
The company’s earnings per share recently jumped an impressive 41.1%, beating market expectations, and it proposed a dividend of 4.96 Singapore cents per share.
Importantly, CAO has a huge net cash position of USD 687 million, giving it the financial firepower to acquire sustainable aviation fuel (SAF) projects or other assets that can drive long-term growth. - The Risks: CAO's near-term risk is the ongoing Middle East conflict, which could keep jet fuel prices high and temporarily reduce overall air travel demand.
The company also faces risks if international flight recoveries slow down or if it loses its near-monopoly status in China's jet fuel import market.
|
"We believe HLA’s value-unlocking story, exposure to AI, and improving return on equity (ROE) maketh the perfect recipe, positioning the company well as a beneficiary of the ongoing Equity Market Development Program (EQDP)." |
Hong Leong Asia (HLA) is an industrial conglomerate with a "BUY" rating and a massive potential upside to a fair value of SGD 4.20.
- Why OCBC likes it: HLA is firing on all cylinders, recently reporting a 28.5% year-on-year increase in earnings per share.
Its Powertrain Solutions division is grabbing market share and seeing surging demand for engines and gensets, heavily driven by new data centres.
Meanwhile, its Building Materials division is riding on the construction upcycle in Singapore and a massive infrastructure and data centre boom in Johor, Malaysia. - The Risks: HLA is vulnerable to higher raw material and energy costs, as well as the risk that its clients might face cash flow problems.
Broader market risks can affect all SMID stocks. Smaller companies are typically more vulnerable to global economic shocks and higher interest rates. For instance, ongoing geopolitical tensions, such as the conflict in the Middle East and energy supply disruptions, can cause short-term market volatility.  In summary, OCBC sees a bright future for Singapore's smaller companies. Nordic, CAO, and HLA offer exciting opportunities for growth and dividends, backed by strong government market reforms. |
→ See also: NORDIC: After a long drought, 2 analyst initiation reports in 2 weeks for this company. What's up?
