By augustine16 //
April 30, 2024

Small-cap stocks are small companies that are primarily focused on growth. Investing in small-cap stocks offers the opportunity to outperform the market indices and could even become a multi-bagger.

However, investing in such small-cap stocks involve a substantial level of risk and volatility. Hence, small-cap stocks are usually shun by investors but it can be very rewarding if you buy the right stocks.

Here are 3 small cap stocks that are poised for BIG upside and which you can add to your watchlist.

Marco Polo Marine

Marco Polo Marine is a regional integrated marine logistics company which engages in shipping and shipyard operations. The Group’s shipping business relates to the chartering of Offshore Supply Vessels for deployment in regional waters.

Under its chartering operations, the Group has diversified its activities beyond the oil and gas industry to include the support of offshore wind farm projects.

The Group’s shipyard business relates to shipbuilding and providing ship maintenance, repair, outfitting, and conversion services through its shipyard in Batam, Indonesia.

3 small cap stocks

In its first quarter results ended 31 Dec 2023, Marco Polo Marine reported 1QFY2024 revenue climbed 22.8% y-o-y to S$29.1 million while gross profit increased by 75.8% to S$11.6 million.

The ship chartering segment’s average charter and utilisation rates for its vessels increased y-o-y while shipyard revenue remained stable, aided by continued shipbuilding activities.

Marco Polo Marine is optimistic on the Southeast Asian OSV market due to high demand from offshore wind farms and the oil and gas industries.

The Group anticipates this trend to persist and underpin higher average utilisation rates. The shipyard segment’s outlook remains positive as the Group foresees ship repair volumes picking up with the stabilisation of China’s reopening.

Shipbuilding activities are also expected to continue their momentum. Hence, Marco Polo Marine could be one of the 3 small cap stocks which are poised for huge upside. You can view the company website here.

ISOTeam

ISOTeam is an established player in Singapore’s building maintenance and estate upgrading industry with many years of Repairs & Redecoration (“R&R“) and Addition & Alteration (“A&A“) experience.

ISOTeam also offers specialist Coating & Painting (“C&P“) services as well as complementary niche services such as waterproofing, commercial interior design and home retrofitting, landscaping, access leasing, green solutions and mechanical and electrical works.

3 small cap stocks

ISOTeam recorded a 16.5% year-on-year jump in total revenue to S$62.7 million for the six months ended 31 December 2023.

The robust topline performance propelled the Group’s 1HFY2024 net attributable profit to S$1.4 million, 34.0% higher YOY as compared to the corresponding six months period a year ago.

The company raises its optimism for a promising full fiscal year ending 30 June 2024. This is due to its strong order book which stands at S$182.4 million as at 31 December 2023. The strong order book is expected to support the Group’s activities to FY2026.

With its return to profitability couple with strong order book, ISOTeam could be one of the 3 small caps that may become a multi-bagger for investors. You can view the company website here.

Seatrium

Seatrium was formed through the merger of Keppel Offshore & Marine and Sembcorp Marine. The Group provides innovative engineering solutions to the global offshore, marine and energy industries.

The Group has 60 years of track record in the design and construction of rigs, floaters, offshore platforms and specialised vessels, as well as in the repair, upgrading and conversion of different ship types.

The Group’s key business segments of Oil & Gas Newbuilds and Conversions; Renewables and New Energies; Specialised Shipbuilding; and Repairs & Upgrades provide a diverse suite of products and services.
Seatrium

Seatrium recorded a revenue of over S$7.3 billion for FY2023, a three-fold increase over S$1.9 billion for FY2022, attributable to strong operational execution, achievement of production milestones, and initial contributions from new projects.

The Group achieved an EBITDA of S$236 million for FY2023, compared to a negative EBITDA of S$7 million in the same period last year, reflecting improved operational performance.

Underlying EBITDA jumped 456% year-on-year to S$628 million from S$113 million in FY2022. Group net loss was S$1.9 billion in FY2023 compared to S$261 million in FY2022.

This was largely due to non-cash write-downs, provisions for contracts, legal and corporate claims, and merger expenses, which amounted to S$2.0 billion for FY2023.

The Group is optimistic on the offshore & marine industry which is well supported by strong industry tailwinds arising from the global energy transition and energy security.

With the completion of its business transformation together with its strong order book of S$16.2 billion, the Group is now able to focus on delivering an improved financial performance in FY2024.

This will bolster its share price and could be one of the 3 small cap stocks that are poised for big upside. You can view the company website here.

Conclusion

Small cap stocks can be very rewarding for investors and as such investors may include these stocks as a small portion of their portfolio. I have mentioned 3 small cap stocks that are poised for big upside. Investors need to do their due diligence before investing in these stocks.

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