Market View Update
August 1 tariff deadline reinforces Singapore’s status as a trade haven
- What’s new: The US maintains its 10% tariff for Singapore goods as the White House announces changes to global reciprocal tarffs with the end of the 1 August deadline
- 10% tariff rate is a relief for Singapore markets as Trump had previous suggested the new baseline could be lifted to 15%-20%
- Singapore keeps its safe haven status with the lowest global tariff rate
- STI’s pullback this week is within our expectations, we had cited tariffs deadline uncertainties, August seasonality and near-term overbought technicals, even as we lifted STI’s target to 4430 with 2 support levels at 4140 and 4028 (less likely to be tested). Two observations:
- The McClellan Oscillator, a measure of short-term market breadth, has eased from a highly overbought level of 35 on 23 July to -15 currently, with levels at/below -20 considered oversold
- FTSE ST Mid, Small and Catalyst Indices outperformed STI week-to-date
- How to position: Stocks in our preferred themes should outperform: 1) small-mid caps, 2) value-unlocking potential, and 3) resilient stocks
- Small-mid caps have the potential to outperform the large-caps, ahead of EQDP deployment into stocks with value-unlocking potential, good earnings prospects, and/or high yields
- Undervalued property stocks (P/BV <0.7X) with redevelopment / value unlocking potential – UOL (Marina Square Mall), CityDev (Delfi Orchard, Orchard Hotel, and Claymore Connect)
- Stocks with resilience, growth and yield – DFI Retail (focus on earnings fromstreamlined operations and total shareholder returns) , Singtel (10% earnings CAGR over FY25-28F supported by improving core business)
Stocks to Watch
OCBC
2Q25 results in line, NIM declined 8bps q/q; dividends down y/y
- 2Q25 revenue and net profit in line, largely due to very low credit costs
- NIM declined by 8bps q/q, as per expectations; 2025 NIM guidance lowered to range of 1.90% to 1.95% (previous: around 2%)
- 1H25 dividends at 41Scts (below consensus expectations of 44Scts) on lower EPS and 50% dividend payout ratio
- We currently have a HOLD call with TP SGD14.40
Seatrium – TP (-), Earnings (-)
- 1H25 core gross margin expansion to 8.2% a confidence booster
- Expect gross margin uptrend to continue; look forward to more contract wins in 2H
- Trimmed FY25/26 forecasts by 16%, factoring in lower assoc/JV income and other income
- Reiterate BUY; TP adjusted down slightly to SGD2.96 following earnings revisions
CapitaLand China Trust – Recommendation (-), Earnings (-), TP (-)
- 1H25 revenue declined 6.3% y/y to RMB867.6mn; DPU dropped 17% y/y to 2.49 Scts, falling short of estimates
- Tenant confidence wanes as reversionary outlook remains soft; we estimate -3%/-10%/-30% reversions for retail/BP/logistics
- C-REIT participation could spell long-drawn recovery, while Yuhuating Mall expected to be DPU-dilutive; perp issuance (Oct expiry) further pressures DPU
- Downgrade to HOLD with revised TP SGD0.75
Capitaland Ascott Trust
Shinjuku windfall fuels more acquisition headroom
- Proposed divestment of Citadines Central Shinjuku Tokyo for JPY25.0bn (SGD222.7mn), achieving c.100% premium to book and 40.4% above independent valuations
- Exit EBITDA yield of 3.2%, with SGD50.8mn net gain after tax boosting CLAS’ divestment gain reserve to c.SGD350mn and driving 1.0% pro forma DPS accretion
- Proceeds to repay JPY and higher cost sterling debt at 4.6% blended cost with more debt capacity to pursue acquisitions, with a probable focus on living sector in developed markets in Asia, Europe
- Maintain BUY with TP of SGD1.15
Sheng Siong
- 2Q25 revenue of SGD362mn (+7% y/y) and earnings of SGD34mn (+1% y/y) in line
- Slower profit growth was largely seasonal, as higher gross profit growth was offset by increased staff cost and right-of-use depreciation
- Declared interim dividend of 3.2Scts, unchanged y/y
- Maintain BUY with TP of SGD2.30, based on premium 20.9x forward PE on unchanged FY26F earnings, supported by strong operational execution
Frasers Logistics & Commercial Trust: 3Q25 business update
Strong positive rental reversion to support earnings resilience
- Impressive positive rental reversions of +43.4% in 3Q25, driven by the L&I segment
- Key positives: i) strong positive rental reversions to support earnings resilience, ii) low gearing that will improve further with divestment, iii) occupancy for L&I portfolio to improve in the coming quarter with leasing secured recently
- What we are watching out for: i) overall borrowing costs as loans are refinanced, ii) FX rates, especially for AUD, iii) redeployment of proceeds following divestment in Melbourne
- Maintain BUY with TP of SGD1.05
Legend
| (+) | (-) |
Earnings | Positive earnings revision | Negative earnings revision |
Recommendation | Upgrade | Downgrade |
TP | Increase | Decrease |
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