These stocks rerated after strategic moves. Can they inspire others to do the same?

[SINGAPORE] For years, Lum Chang Holdings – which listed on the Singapore Exchange (SGX) in 1984 – was viewed by the market as a heavy-set construction player, keeping its valuation firmly suppressed.

But, last year, something changed.

Lum Chang’s stock roared on the back of a construction boom in Singapore and a systemic push by the Republic to revive the equities market.

More importantly, Lum Chang’s board realised it held a high-margin asset hidden within the broader group: an urban-revitalisation business focused on the conservation and restoration of heritage buildings, which consistently delivered net margins above 10 per cent.

The management decided to spin off Lum Chang Creations , and listed it on the SGX’s Catalist board in July 2025.

“The company was doing technically complex, premium-priced work that most generalist contractors couldn’t touch,” said Emily Choo, chief executive of investor-relations firm Gem Comm. “But the market didn’t know that story yet, so we articulated it.”

Her firm helped Lum Chang Creations outline its asset-light model, its natural alignment with the Urban Redevelopment Authority’s heritage conservation agenda and its discipline to walk away from low-margin volume.

The newly listed unit’s net profit more than doubled to S$11 million in the most recent half-year, with return on equity (ROE) in the mid-30s – well above the sector average. Meanwhile, the stock has risen 292 per cent from its initial public offering price.

“It’s not enough to be good,” said Choo. “You have to make the case for why you’re different.”

Lum Chang Creations’ strong operational performance also lifted its parent company. Investors of Lum Chang Holdings enjoyed special dividends that were paid out in early 2026.

This strategic restructuring and storytelling pushed Lum Chang into a premium tier of SGX-listed companies that are delivering stronger returns and commanding higher valuations.

It is a manoeuvre several others have pulled off.

Value up

Lum Chang is an example of a company that had been lagging previously, with weaker ROE, while trading below its book value.

Other companies in a similar situation that also saw recent improvements to both ROE and price-to-book (P/B) ratios include Apac Realty and Kencana Agri .

How much further these stocks have to run will depend on how persistent they are with their value unlocking, but their journeys may offer a playbook for others like them.

For instance, Apac Realty seized the opportunity provided by strong operational results to reward its shareholders with a generous capital-return strategy.

The real estate agency’s revenue climbed 20.4 per cent to S$675.6 million in FY2025 as new private home sales rose in Singapore. On the back of higher commission rates, its net profit nearly trebled to S$20.5 million.

But the board did not hoard this cash. Instead, it bumped up the total dividend to S$0.045 cents a share, translating to a high dividend payout ratio of 78.2 per cent.

Witnessing the company’s consistent policy of returning cash to shareholders gave the market the confidence to rerate the stock, pushing its P/B ratio firmly above 1.

Kencana Agri, meanwhile, has turned itself around by capitalising on higher crude palm oil prices. The improved yield from its fresh fruit bunches, combined with operational discipline, expanded its net profit margin from a mere 1 per cent to over 11 per cent.

The company used the additional cash from operations to cut its net debt; its discipline has been recognised by the market with a higher valuation.

Further rerating

Even for companies that were already trading above their book values, taking concrete steps to drive growth has also pushed further rerating.

Singtel , for example, followed its 2021-2024 strategic reset with the Singtel28 growth plan in May 2024 to boost customer experiences and deliver value for shareholders.

Under Singtel28, the group delivered sustained earnings before interest and tax growth, recycled capital to fund growth initiatives, and its dividends more than doubled since FY2021.

Its P/B ratio has also improved from around 1.6 at the end of 2023, to around 2.8 times at the end of 2025.

Similarly, the P/B ratio of SIA Engineering has also grown from around 1.6 times at end-2024 to 2.4 times at end-2025. This coincides with the group’s ROE improving to over 9 per cent, from around 6.4 per cent a year earlier.

The group previously undertook a transformation programme to boost competitiveness by increasing productivity and reducing operating costs.

These examples prove that the leap towards improved valuations and ROE is possible across very diverse sectors – and in different ways. But while these companies offer a pathway for success, a massive opportunity remains for others in the local market.

Building a culture of value creation

Chan Wen Jie, head of ESG at Lion Global Investors (LGI), observed that corporate reform and business improvement is a multi-year process, and most companies are still in the early stages.

However, he pointed out that investors are already pricing in expectations of improved liquidity and a more optimistic outlook for Singapore Inc.

“Ultimately, reality and expectations must converge, and the plan – or the hope – is that convergence happens upwards, driven by improved corporate dynamism and positive earnings revisions,” he said.

Moving the market requires a multi-party push. This is why the proposals tabled by SGX and the Equities Market Review group are vital.

Some, such as the proposal to tie executive remuneration to value creation metrics, represent a profound cultural change.

A company sitting on an underperforming asset may have little incentive to do anything about it

But if the chief executive’s bonus depends on capital efficiency, there would be greater motivation to sell the lazy asset, recycle the capital into a high-yield project, or return the cash to shareholders via a special dividend.

SGX market strategist Geoff Howie pointed out that this provides a solid “reference point for governance discussions”, keeping focus on capital efficiency and discipline when boards consider reinvestment or divestment.

“For the companies that already link executive remuneration to operating or return-based metrics, the proposal provides an opportunity to make those linkages more explicit,” he said. “This can help investors to better see how operating performance, capital allocation and incentives connect.”

Chan of LGI agreed that the requirement could help sharpen the focus on capital allocation and capital efficiency.

He cautioned, however, against letting it become a simple box-checking exercise with easy-to-meet targets, adding that the choice of value creation metrics matters enormously.

“A singular focus on ROE, for instance, could push boards toward asset-light strategies or aggressive buybacks that flatten the ratio in the short run but hollow out the business over time,” Chan warned.

A well-constructed incentive framework must pair such metrics with guardrails to ensure capital recycling decisions serve durable value creation.

Raising valuations

Another critical proposal is the mandate for clear disclosure of dividend policies. The lack of clarity around dividends is a major reason companies get trapped in lower valuations.

Imagine an institutional fund assessing a profitable mid-cap company. The company makes good money, but it has a history of hoarding cash. The fund manager has no way of knowing if the board will distribute the profits or keep them sitting in a bank account. Because of this uncertainty, the fund applies a strict discount to the stock price.

A formal, transparent dividend policy removes this fog. “It allows funds to incorporate dividends more explicitly into their return assumptions when assessing P/B valuations,” SGX’s Howie explained.

Chan added that while disclosure does not constitute a binding commitment to distribute dividends, it gives institutional investors clearer visibility into how boards think about capital allocation.

“Companies that do show a genuine willingness to share the fruits of growth with minority shareholders, whether through dividends or buybacks, are likely to command higher valuations,” he said.

One other significant shift is the regulatory push for forward guidance. For years, many mid-cap boards refused to share earnings forecasts or strategic targets. They used the fear of regulatory backlash as a convenient shield against giving investors clear visibility.

Regulators recently dismantled this excuse, explicitly encouraging companies to provide forward guidance.

When a board publicly charts its anticipated earnings or capital management plans, it strips away the uncertainty that drags down stock prices.

Institutional investors require this forward visibility to accurately model future cash flows. Giving the market a credible roadmap makes it much easier for funds to justify paying a premium.

Clearer communication

These regulatory changes are supported by schemes such as Value Unlock, the S$30 million package that provides direct grants for better communication.

Chan described effective communication as a “multiplier”. For companies that are fundamentally strong but operate under the radar, a well-executed investor-relations strategy can help drive a valuation rerating.

“However, communication alone cannot substitute for weak underlying performance,” he said.

In recognition of this, the grants also include funding to help companies sharpen their corporate strategy alongside their messaging.

The Singapore market’s transformation is an ongoing process. Ecosystem initiatives provide the necessary framework; the tools and the momentum are now present on the local bourse.

Singapore companies that rerated have shown that proactive management works. And they provide optimism that others, too, can chart a path to better valuations.