Turn to high-performing small caps as domestic earnings growth tumbles, says DBS

These five stocks offer growth at a reasonable price.

Investors looking for impressive earnings growth are bound to be disappointed by most Singapore-listed stocks this year. According to DBS, the Singapore market offers barely any growth on an overall basis, with the benchmark Straits Times Index projected to book a measly 2.2% earnings growth in 2016.

Despite the market's dismal prospects, DBS reckons that there are still small- and mid-cap players which are projected to record firm earnings this year.

These smaller players include Cityneon Holdings, Japfa, mm2 Asia, and Jumbo Group. DBS is also optimistic on the prospects of large-cap palm oil player Bumitama Agri.

DBS noted that Cityneon's full-year earnings should jump after the incorporation of Victory Hill Exhibitions. Meanwhile, an upfront licence fee which will be partially recognised and a ramp-up in operational sets are expected to drive a 2-year earnings per share compound annual growth rate (CAGR) of over 300%.

Japfa, meanwhile, will benefit from a recovery in consumer sentiment and purchasing power in its core markets. DBS forecasts an EPS CAGR of 46% over the next two years for Japfa.

As for mm2 Asia, growth in local productions, expansion into the China market, and contribution from cinema operations and newly acquired entertainment company, UnUsUal Group is expected drive a 2-year EPS CAGR of almost 45%.

Jumbo Group, on the other hand, will benefit from new store openings in Singapore and China, coupled with higher customer traffic and economies of scale. The group is expected to have a 2-year EPS CAGR of 35%.

“With market conditions still uncertain, investors would do well to look for stocks that offer Growth At a Reasonable Price,” DBS said.