The Straits Times Index had a good first half.
The SPDR STI ETF (SGX: ES3), which tracks Singapore’s Straits Times Index (SGX: ^STI), returned 13.1% for the first half of 2026.
Three small-caps did far better.
Micro-Mechanics (SGX: 5DD) delivered 78.1% in total returns over the same period.
Civmec (SGX: P9D) returned 52.5%, while Valuetronics (SGX: BN2) came in at 26.7%.
Each beat the index by a wide margin.
The question worth asking is why, and whether the run has legs.
Why did a semiconductor tools supplier double?
Micro-Mechanics designs and makes consumable tools and parts used in critical semiconductor processing.
The business runs on chip demand, and chip demand is running hot.
For the third quarter ended 31 March 2026 (3QFY2026), revenue rose 16.2% year on year (YoY) to S$18.6 million.
Net profit climbed 18.8% to S$3.8 million – the Consumable Tools segment led the way, with sales up 20.9% YoY to S$14.4 million on demand from artificial intelligence, computing, and memory applications.
China stayed the largest market, as sales there for the first nine months rose 25.2% YoY to S$18.8 million.
The group ended the quarter with S$25.7 million in cash and no bank borrowings, a net cash position.
The run is not without wrinkles.
Free cash flow (FCF) came in at S$2.8 million for the quarter, down from S$3.6 million a year ago as working capital needs rose.
FCF is the lifeblood of dividends, so a softer quarter is worth watching.
No dividend was declared – the company pays only in its second and fourth quarters.
Management also flagged that it is keeping a watchful eye on geopolitical developments, a reminder that a China-heavy, chip-linked business carries external risk it does not control.
Still, the backdrop helps explain the price.
The WSTS forecasts global semiconductor sales to grow 90% to nearly US$1.5 trillion in 2026.
A profitable, net cash supplier sitting in that current is easy for the market to like.
How did Civmec rise while earnings fell?
This is the odd one.
Civmec’s share price rose 52.5% even as its results weakened.
The integrated construction and engineering group serving the energy, resources, infrastructure, and marine & defence sectors saw revenue fall 24.3% YoY to A$380.4 million in its first half of the fiscal year ended 31 December 2025 (1H2026).
Net profit dropped 19.0% to A$21.4 million, with the Resources segment doing most of the damage – its revenue nearly halving to A$222.7 million.
Reduced activity levels drove the fall, and a single soft segment can pull a whole half down.
Still, gross margin improved to 11.8% and net margin edged up to 5.6% from 5.3%, so the group kept more of what it earned even as revenue shrank.
So why the rise? The answer sits in the outlook.
The order book grew to A$1.35 billion as at 31 December 2025, up from A$1.25 billion three months earlier.
On 1 July 2025 the group completed the A$17.5 million acquisition of Luerssen Australia, strengthening its naval shipbuilding arm.
Management is working through several early contractor involvement processes for medium to large projects.
The balance sheet held firm.
Civmec ended the period with A$87.6 million in cash against A$60.0 million in borrowings, a net cash position.
The interim dividend of A$0.025 per share was maintained YoY.
Markets look forward, and Civmec gave them something to look at.
The risk is plain enough.
An order book has to convert into revenue, and until it does, the earnings gap is the part investors can see today.
What is driving Valuetronics’ re-rating?
Valuetronics is an electronics manufacturing services provider running two segments, Consumer Electronics and Industrial and Commercial Electronics, from plants in China and Vietnam.
For the year ended 31 March 2026, revenue slipped 4% YoY to HK$1.66 billion.
Net profit dropped 33.1% to HK$111.4 million, dragged by a HK$48.4 million net loss tied to its Trio AI investment.
Strip out Trio AI and adjusted net profit was HK$159.9 million.
The split matters.
One is what the business earned from operations, the other is what a single investment cost it, and investors should not read the two as the same thing.
The cash story tells a different tale.
FCF swung to a positive HK$178.4 million from negative HK$20.1 million a year ago, as capital expenditure fell to HK$47.0 million from HK$228.0 million.
The group ended the year with HK$1.21 billion in cash and no borrowings, a net cash position.
That cash is heading back to shareholders.
Valuetronics raised its ordinary FY2026 dividend to HK$0.38, up 41% YoY, and lifted its payout policy to 50% to 70% of net profit from 30% to 50%.
Separately, management announced a programme to return about HK$300 million in surplus cash across FY2027 and FY2028 through special dividends and share buybacks, with roughly HK$146 million earmarked for FY2027.
A rising payout backed by real cash generation is a straightforward reason to re-rate a stock.
The caution is in the trading picture.
The CE division fell 41.7% YoY as the group phased out low-margin legacy products, and management expects to stay profitable in FY2027 but flagged a fluid environment amid US tariff measures and supply-chain uncertainty.
The capital return leans on surplus cash the company already holds, which is reassuring.
The operating income that refills it is the part still exposed to the world outside.
Get Smart: One theme, three routes
The three winners share a shape.
Each carries a net cash balance sheet, sits on a demand story the market can price (whether that is AI chips, defence shipbuilding, or industrial electronics), and gives investors a forward reason to hold, not just a backward one.
Two of them saw profits fall this period.
Their shares rose anyway.
That is the market paying for what comes next: order books, cash returns, and structural demand.
But what the market pays for in advance, it can also take back.
An order book can stall. A chip cycle can turn. A tariff can bite.
The point is not to chase a return after it has been printed.
It is to weigh the promise against the risk before the crowd does, and to hold on when the ingredients still stack up.
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Disclosure: Calvina L. does not own shares of any companies mentioned. Chin Hui Leong contributed to the article and owns shares of Micro-Mechanics.
