$30m boost for Singapore-listed firms’ investor relations will help unlock value: Market watchers

SINGAPORE – Some Singapore-listed companies may be looking forward to a better year in the stock market in 2026 after

getting a shot in the arm

to strengthen investor engagement and enhance shareholder value, said market watchers.

The $30 million Value Unlock initiative provides two grants, the Equip Grant and Elevate Grant, to help firms to improve their corporate strategy, optimise capital and step up on their investor relations. 

It was announced in November, along with other measures, as part of efforts to revive the local stock market.

Mr Joey Choy, a principal investment specialist at Phillip Securities, said with this support, companies can communicate better with investors and share their growth story and plans clearly with them.

Investors will thus understand a company better, and will be more confident about investing in it, he noted, adding “that’s how we rebuild interest in the local stock market”. Until this happens, many companies continue to trade below their true value or what they are actually worth, Mr Choy said. 

When a company’s share price is below its book value, or its assets net of liabilities, it means investors are paying, say, $5 for a stock that is worth $10.

Ms Emily Choo, chief executive of investor and public relations firm Gem Comm, calls this the “good company, bad stock” syndrome.

“Strong operational performance does not automatically translate into share price appreciation,” she added.

There are 614 companies listed on the mainboard and the Catalist board of the Singapore Exchange (SGX) as at Dec 18.

The mainboard is for larger, more established companies, while the Catalist board is for small and medium-sized enterprises and growth companies.

A check by The Straits Times found that 353, or 57 per cent, of the 614 companies are trading at a price-to-book, or PB, ratio of less than 1, which means these companies are trading below their book value.

A company’s stock may trade below book value because the markets have underappreciated its growth potential. This could happen if it is in a business that is not well understood by investors.

Unlocking that value therefore means the company’s true worth gets recognised and its stock price goes up.

Ms Chua Jen-Ai, equity research analyst at Julius Baer, believes that the Value Unlock programme would yield the biggest impact among the small and mid-caps.

She added that shareholder returns here could be sub-optimal because the interests of controlling shareholders, for instance in family-owned companies, may not be aligned with those of minority shareholders.

For instance, controlling shareholders might want to re-invest the company’s profits to grow the business, instead of paying out dividends, which sometimes puts them in conflict with minority shareholders.

Gem Comm’s Ms Choo added that many small-to-mid caps and family-run businesses regard investor relations as a “compliance obligation” that they have to fulfil, instead of as a tool to create value.

They focus on doing the bare minimum, which thus limits their ability to communicate effectively with the investment community.  

However, the Value Unlock programme is largely voluntary and incentive-based, so while the Government can offer grants, it is still up to companies if they want to opt in, she said.

More details of the programme beyond the broad measures announced on Nov 19 should be forthcoming, noted Julius Baer’s Ms Chua. 

She added that regulators here may be going for a lighter touch approach compared with in Japan.

“There does not appear to be hard price-to-book targets, penalties or requirements for companies to disclose action plans,” she said. 

Mainboard-listed Nanofilm Technologies is one company that sees the value of doing more investor and analyst outreach.

The company specialises in advanced materials and coatings for industries like consumer electronics, automotive and semiconductors.

Mr Kay Lim, group chief financial officer of Nanofilm Technologies, made this point during a recent company site visit for media and analysts.

“We can interact with investors during the annual general meetings but that would not be enough,” he said.

Nanofilm is looking to put in resources to deepen the engagement. For example, it may plan an investor day for institutional and retail investors.

Such an event could be held half-yearly, and would encompass the entire business. There could also be quarterly sessions covering different parts of the business, Mr Lim said.

Nanofilm’s underlying core business is in coating technology, but even in this space, there are many different kinds of technology. 

This complexity makes it difficult for an everyday investor to understand the company and its business, he noted, adding that “it is a continuous effort to interact”.

The company is among 62 listed companies in the tech sector on the SGX and trades above its book value, at a PB ratio of 1.04 as at Dec 18.

Some of its peers are trading at much higher PB values. For instance, semiconductor optics company MetaOptics trades at a PB of 90.09 and Info-Tech, a cloud-based provider of human resource management and accounting software, trades at a PB of 30.49.

Some of Nanofilm’s peers are trading below book value. As at Dec 18, the US dollar tranche of semiconductor test solutions provider AEM Holdings, for example, has a PB of 0.83 while electronics firm Creative Tech has a PB of 0.85.

A company trades above book value when investors are bullish about its business outlook or have confidence in its senior management.

In Nanofilm’s case, interest appears to be picking up as the company’s financial performance improves. The company’s revenue rose 20 per cent in the third quarter ended Sept 30, from a year earlier, to $72 million.

Ultimately, financial performance is fundamental to good investor relations, Mr Lim said.

The company has to deliver financially first before it can build up the trust with the investing public and other stakeholders.

Investor relations are then about making its story known to the public, including investors and other stakeholders, he noted.

Investor relations is “the cream on the cake”, Mr Lim said, adding that Nanofilm “cannot ignore the cream because without the cream, it is just a normal cake”.

Investment specialists, like Mr Choy, play a key role as the bridge between companies and investors.

Mr Choy said clients typically turn to their advisers when they want to understand what is going on with a company, especially when there is news or key developments.

“We help to explain things in simple terms, cut through the noise, and highlight what really matters to them,” he added. 

Mr Choy also stays in touch with the listed companies by attending analyst briefings and corporate access events.

When he senses interest on the ground around a certain stock or sector, he will relay the information to the relevant companies.

In this way, he acts as a two-way bridge by helping clients to understand companies better, and by helping companies to be more aware of the ground sentiment.

Ms Choo added that companies should engage investors and analysts as partners and move from one-way disclosure to a genuine two-way dialogue.

This involves establishing a clear and structured feedback mechanism, communicating actions taken in response to that feedback, and setting clear expectations for ongoing engagement, she said.