10 largest Catalist stocks beat blue chips: Report

Hong Kong superstar Jacky Cheung's concert here in February. A Classic Tour is among many large-scale shows that concert promoter UnUsUaL has organised. Its shares have soared 170 per cent since it was spun off from mm2 Asia in April.
Hong Kong superstar Jacky Cheung's concert here in February. A Classic Tour is among many large-scale shows that concert promoter UnUsUaL has organised. Its shares have soared 170 per cent since it was spun off from mm2 Asia in April.PHOTO: UNUSUAL ENTERTAINMENT

Return rises to 35.2% against STI's 12.4%, but some analysts wary of drawing conclusions

The 10 largest stocks on the Catalist board have delivered a market cap-weighted average price return of 35.2 per cent so far this year, easily outperforming the blue-chip Straits Times Index (STI) with 12.4 per cent.

The Singapore Exchange (SGX) used the secondary board's 10 largest stocks by market capitalisation to come up with the comparison in a report yesterday.

The top performer was concert promoter UnUsUaL, whose shares have soared 170 per cent since it was spun off from mm2 Asia in April.

In second place was Moya Holdings Asia, which became Indonesia's largest water treatment company after buying over its much larger rival Acuatico in June. Its shares have surged 118.9 per cent this year.

Coffee-shop operator Kimly was next, up 50 per cent, while Singapore Medical Group (SMG) was ahead by 29.9 per cent. Waste management firm 800 Super Holdings rounded out the top five with a rise of 24.9 per cent.

The common thread running through the top names is that they all sell a specific growth story.

Said Mr Jarick Seet, who heads small-and mid-cap research at RHB Research, which initiated coverage on Moya last month: "Moya will still be worth watching. It wants to be a consolidator, and we expect more acquisitions in Indonesia.

"The Jakarta concession expires in 2023. If it can get a renewal, then it would have bought a cheap asset. It paid only nine times earnings."

Mr Seet also covers SMG, which has been on an acquisition spree. The addition of more specialist clinics has helped the company to grow earnings even as other healthcare players such as Singapore O&G missed expectations, he said.

UnUsUaL is covered by NRA Capital head of research Liu Jinshu. He said: "It's a market leader in its business in Singapore. It holds the most number of large-scale concerts and is also expanding into China."

Analysts also like 800 Super as a defensive play, since government contracts make for stable business.

To be sure, only six of the 10 biggest Catalist stocks have recorded rises this year. It is also hard to draw conclusions about blue chips versus second-liners based on the SGX report.

As it picked the 10 biggest Catalist stocks to focus on, any inferences drawn would be subject to "survivorship bias", since shares that are in favour naturally see their market caps grow, said Mr Liu.

In fact, the FTSE ST Catalist Index, which has 170 constituents, has delivered a measly 3 per cent price return this year.

KGI analyst Colin Tan noted that it remains to be seen if pure investing or speculation is behind the rise of the top performers named in the SGX report.

A version of this article appeared in the print edition of The Straits Times on October 06, 2017, with the headline '10 largest Catalist stocks beat blue chips: Report'. Print Edition | Subscribe