• Across the SGX, every investor can easily name a bunch of stocks that have weakened in June. It's the month of school holidays. Layer on the ongoing FIFA World Cup (running from mid-June into mid-July), and the result is subdued trading volumes as both local and global participants shift focus from portfolios to pitches. • UOB Kay Hian has highlighted examples of stocks which has attracted buybacks and which analysts are positive about based on solid fundamentals, improving earnings visibility, or attractive valuations. • Meanwhile, if predictions are right, the tide is set to turn in July, so reload and take aim.
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Excerpts from UOB Kay Hian report
Analysts: Heidi Mo, John Cheong, Tang Kai Jie
• Seven SMID caps within our coverage universe bought back S$5.6m of stock over 19 trading days in Jun 26. • Food Empire led with S$2.2m or 0.93m shares, buying steadily near multimonth lows at an average of S$2.39, down from S$3.10 earlier this year. • Maintain BUY on our top SMID picks FEH, VALUE, PAN and UGAI. Buyback clusters at multi-month lows underpin our conviction. |
| A SMID-cap buyback wave in June |
Across our coverage universe, seven SGX SMID cap companies executed open-market repurchases totalling roughly S$5.6m over 33 repurchases, plus a further US$1.05m on UltraGreen.ai’s US dollar counter.
Buybacks spanning consumer (Food Empire), electronics manufacturing (Valuetronics, Venture), building materials (Pan-United), advanced materials (Nanofilm), gaming art (Winking Studios), events (Dezign Format) and biotech (UltraGreen.ai) point to a sector-wide judgment by boards that SMID-cap valuations have overcorrected.
The bulk of repurchasing occurred at prices well below levels at the beginning of the year, which we regard as higher conviction from management as they deploy their balance sheet at prices they consider cheap, accretive to shareholders and supportive of EPS.
• Food Empire (FEH SP): The standout, buying near the lows. FEH was by far the most aggressive in June, repurchasing 0.93m shares for S$2.21m across five days at an average S$2.39, sitting well below the above-S$3.00 levels seen earlier this year.
MacCoffee is Food Empire's best-seller in key market Russia.A board willing to commit the largest dollar amount in our screening after its shares have de-rated is, in our view, signalling that the sell-off is sentiment-driven.
• Valuetronics (VALUE SP): Steady accumulation. VALUE bought 1.17m shares for S$1.28m over five days in June within a tight S$1.078-1.107 range. The consistency of size and price suggests a conviction-led buyback, and the cash-rich balance sheet that has long underpinned the equity story comfortably funds it.
We see the repurchases as a floor under the stock and maintain BUY.
• Pan-United (PAN SP): Buying into weakness. PAN repurchased 0.28m shares for S$0.42m in June, stepping in as the stock eased from S$1.51 to S$1.44 by 22 June.
Management has been willing to add on weakness, and against a resilient Singapore construction-materials backdrop, we read the buyback as a confidence signal.
• UltraGreen.ai (UGAI SP): Buybacks alongside M&A on a new dual counter. UltraGreen.ai had only listed its SG dollar counter (UGS SP) on 18 May 26, and spent June repurchasing S$0.17m on its new SG dollar counter (UGS) and US$1.05m on its primary US dollar counter.
On 15 June, the company also announced the acquisition of Ihld Med Tech. Deploying capital into both buybacks and M&A signals management's confidence and a view that the shares are undervalued as the inorganic growth pipeline builds.
We note that the Ihld Med Tech contribution is potential upside not yet in our forecasts.
Among the lighter buyers, Nanofilm (S$1.38m) stands out for accelerating from 100,000 to 500,000 shares during 12-23 June before adding a further 341,000 shares on 26 June, suggesting building conviction at the S$1.16-1.26 level. Winking Studios (S$0.08m) and Dezign Format (S$0.07m) were modest but notable for smallcap names where any buyback meaningfully shrinks float. Finally, large-cap Venture Corp repurchased S$1.5m at around S$17.35, confirming that SGX valuations are attractive. |
→ See also: “Is This a Buying Opportunity?” What Investors Asked At UOB KH webinar
