DBS Group Research is keeping its “buy” call on Apac Realty, while significantly increasing its target price to 80 cents from 50 cents previously, following its recent 1HFY2025 ended June 30 results, which saw earnings surge 176.4% y-o-y to $11.3 million. Revenue was 28.8% higher y-o-y at $341.5 million.
The group says that this threefold increase in profitability is driven primarily by robust activity in the new private residential segment during the period. Revenue from new home sales more than doubled to $131.2 million, driven by a marked increase in transaction volumes, as developers sold 5,566 private residential units (including executive condos) compared to 2,484 units in the same period last year.
In an Aug 11 report, analysts Tabitha Foo and Derek Tan say: “We expect Apac Realty to deliver around 85% CAGR in net profit from FY2024–FY2026, driven by a recovery in new sales transaction volumes from a huge launch pipeline, which typically yield higher margins.”
They believe that the group is also well-positioned to capture market share, retaining its position as the second-largest agency in Singapore after PropNex.
See also: OCBC's Lim cuts fair value for SingPost to 49.5 cents
The analysts note that core central region (CCR) projects continue to see healthy take-up despite the 60% additional buyer stamp duty (ABSD) for foreigners, supported by price convergence with the rest of central region (RCR) and outside central region (OCR) segments and attractive price quantum, attributed to smaller unit sizes.
With $47 million in cash on Apac Realty’s balance sheet, or about 13 cents per share, and a highly cash-generative, asset-light business model, Foo and Tan see room for a special dividend, which could be an additional re-rating catalyst for the stock.
“A repeat of the 3.0 cents special dividend declared in 2021 would imply a highly attractive yield of over 12%,” they add.
See also: CGSI's Ong raises target price for BRC Asia to $4.30 on healthy industry fundamentals
“There is upside potential if Apac Realty captures higher-than-expected market share in upcoming launches. As one of the top two property agencies, Apac Realty remains a value play with room for re-rating as it narrows the valuation gap with PropNex,” say Foo and Tan. — Samantha Chiew
Beng Kuang Marine
Price target:
Maybank Securities ‘hold’ 22 cents
Encouraging 1HFY2025
Maybank Securities is keeping its “hold” recommendation on Beng Kuang Marine with a higher target price of 22 cents from 19 cents previously, following the release of results for its latest 1HFY2025 ended June 30.
Revenue for the first half fell 15.2% y-o-y to $50.8 million, while patmi was $2.9 million, in line with Maybank’s estimates. Profit margin has improved from 35.5% in 1HFY2024 to 38.2% in 1HFY2025, which analyst Jarick Seet finds “encouraging”.
In an Aug 11 report, Seet says: “We expect 2HFY2025 to be slightly better than 1HFY2025 and margin improvements to sustain in 2HFY2025 as well. We maintain our earnings forecasts.”
The infrastructure & engineering business accounted for 81.1% of overall revenue in 1HFY2025. It encountered some delays due to the execution timing of projects at the start of the year in its Africa and Guyana operations, but Seet believes that it should fare better in 2HFY2025 due to the absence of this delay. Beng Kuang Marine’s supply deck equipment business has reoriented its market focus towards South-east Asia and India and has secured new contracts valued at $6.95 million in 1HFY2025.
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Meanwhile, corrosion prevention revenues are largely recurring in nature and remained resilient at $9.6 million in 1HFY2025, a slight dip y-o-y. Singapore operations delivered a stronger performance from floating production storage and offloading (FPSO) and offshore wind farm projects. In comparison, Batam operations had lower work volume due to key projects reaching their tail-end stages in 1QFY2025. Management is engaged in tendering for various upcoming projects at its Batam operations.
“While we expect better 2HFY2025 earnings as compared to 1HFY2025, warrants dilution would put a cap on its share price upside for FY2025. With declining oil prices, which we highlighted as a key risk, we believe demand for future projects and margins may also be impacted if oil prices continue to decline,” says Seet. As a result, he conservatively thinks that it is better to wait and see for now and maintain his “hold” call. — Samantha Chiew
Singapore Telecommunications
Price targets:
HSBC ‘buy’ $4.45
Citi Research ‘buy’ $4.46
Keeping Singtel at ‘buy’ after Simba news
HSBC analysts Piyush Choudhary and Rishabh Dhancholia have kept their “buy” call on Singapore Telecommunication (Singtel) along with a target price of $4.45 after news that the local mobile sector is finally set for consolidation with Simba buying over M1 from Keppel.
The twist to this long-expected move is that the buyer was long figured to be StarHub. Singtel, as the market leader, is unlikely to be a buyer because of anti-competitive concerns.
Either way, with M1 now under Simba, pricing competition is set to ease with a smaller number of players, the market is set for repair.
“We think there is upside risk to our forecasts for Singtel’s Singapore FY2027 mobile service revenue, if the regulator approves the [Simba-M1] transaction,” state the HSBC analysts in their Aug 11 note. They estimated that a 5% increase over current projections would lift ebitda and net profit by 1.2% and 1.4%, respectively, compared with their baseline forecast of 2% growth in mobile service revenue for FY2027.
HSBC forecasts Singtel’s ebit growth over FY2025 to FY2028 to average 10% annually, reaching $1.8 billion by FY2028, driven by rising mobile revenue at Optus, cost optimisation in Singapore and Australia, and growth in NCS and data centres. It also expects ebit growth in FY2027 to be driven by the doubling of data centre capacity in Singapore to 120 megawatts (MW).
Dividends are projected to rise alongside core earnings and additional payouts from value realisation dividend or VRD from asset monetisation initiatives. “We forecast DPS (dividend per share) to rise by 3% y-o-y in FY2026 to 17.5 cents and 3% y-o-y in FY2027 to 18.0 cents,” note the HSBC analysts.
Separately, Citi Research’s Arthur Pineda says Simba, which had relied heavily on discounting to win market share, struggled to make significant inroads as incumbents cut prices and opened the door to mobile virtual network operators (MVNOs) to defend their turf.
The Simba-M1 consolidation will scale Simba to be on par with StarHub, reducing the incentive to keep undercutting rivals. “Scale reduces incentive to price compete as it serves to weigh down on a company’s overall revenue momentum. The logical move based on game theory is to take a more cooperative stance on price competition,” says Pineda in his Aug 11 note.
Singtel, on its part, is set to enjoy a relatively smaller uplift, given its broader footprint spanning Australia, Indonesia, India, Thailand and the Philippines.
As such, Pineda is keeping his “buy” call with a $4.46 fair value, citing Singtel’s mix of steady cash flow from developed markets and growth from emerging markets, alongside potential value from a strategic review of assets. Singtel’s strong cash generation supports a 5% dividend yield, he adds. — Nurdianah Md Nur
Bumitama Agri
Price target:
OCBC Investment Research ‘buy’ $1.05
Better than expected 1HFY2025 earnings
Ada Lim of OCBC Investment Research has become more bullish on Bumitama Agri following its 1HFY2025 earnings ended June 30, that came in better than expected.
From an earlier fair value of 97.5 cents, Lim, who has a “buy” call, now figures that this counter is worth $1.05.
In 1HFY2025, the palm oil producer reported patmi of IDR1.3 billion ($101,886), up 48% y-o-y. Revenue in the same period was up 28% y-o-y to IDR9.7 trillion, thanks to a 22% increase in average selling prices to IDR14,500 per kg, which more than offset a 1% dip in sales volume.
In addition, the company was able to maintain cost discipline, achieving a 2.6 percentage point (ppt) expansion in ebitda margin.
To reward shareholders, Bumitama Agri plans to pay an interim dividend of 3.63 cents per share, which is more than triple that declared for 1HFY2024. This represents an annualised yield of 4.3% based on the last close price of 84 cents as at Aug 11.
Going into 2HFY2025, Bumitama Agri expects production to continue improving while palm oil prices trade sideways.
“Despite a rebound in benchmark prices in July, CPO prices continue to remain competitive vis-à-vis soybean oil prices, which have rallied on optimism over US biofuel demand. This has driven surges in imports from China and India in June,” says Lim.
Meanwhile, domestic demand in Indonesia remains robust, supported by the B40 biodiesel mandate and affirmation of plans to move towards B50 in 2026.
After assuming “firmer” average selling prices for the rest of the year, plus updated forex estimates given the recent volatility of the Indonesian rupiah, Lim has derived her higher fair value of $1.05. — The Edge Singapore
Yangzijiang Shipbuilding
Price target:
CGS International ‘add’ $3.90
Strong 1HFY2025; strong orderbook
CGS International (CGSI) analysts Lim Siew Khee and Megahna Kande are raising their target price on Yangzijiang Shipbuilding (YZJ) to $3.90 from $2.72 previously after the group’s 1HFY2025 ended June 30 results. The analysts have maintained their “add” call on the stock.
For the 1HFY2025, YZJ’s net profit of RMB4.18 billion ($750 million) exceeded Lim and Kande’s expectations, forming 60% and 57% of theirs and Bloomberg consensus FY2025 forecasts, respectively. They attribute this to lower steel prices, which drove shipbuilding gross margin to 35%, against their estimate of 29%.
Revenue, which came in at RMB12.8 billion, is broadly in line at 45% of the pair’s FY2025 forecast.
The group delivered a total of 23 vessels in the first half, including four delivered by its unlisted joint venture, Yangzi-Mitsui.
Share of profits from associates also came in stronger than expected at RMB481 million from the execution of gas carriers.
Lim and Kande write: “We lift our shipbuilding gross margin forecasts to 30% to 32% for FY2025 to FY2026 to reflect the strong 1HFY2025. We believe 2HFY2025 could see slightly lower overall gross margin versus 1HFY2025 as YZJ targets to deliver more units of lower-margin oil tankers.”
Meanwhile, YZJ’s dividend payout remains at 30% to 40%.
The group’s management expects steel prices to inch up in the 2HFY2025. Currently, steel prices stand at around RMB3,500 per metric tonne as at the Aug 7 report.
Presently, YZJ’s order book stands at US$23.2 billion ($29.8 billion), with around US$740 million in order wins year-to-date.
“However, relative to 1QFY2025, management has turned more positive as shipowners have digested the impact surrounding US Trade Representative (USTR) section 301 against Chinese shipbuilders and started to order or negotiate for newbuild contracts,” write Lim and Kande.
With this, the pair have raised their FY2025 order assumption to US$3.7 billion.
The group is currently seeing strong enquiries for small to mid-sized vessels for delivery in the FY2028 or FY2029.
The analysts write: “YZJ currently has around US$2 billion in letters of intent (LOI) awaiting final confirmation of orders. With the current yard capacity, we see sustainable order wins of US$4.5 billion per annum. The US$6 billion order target previously set was on the assumption that another new yard (Runze) would take on large vessels for FY2028 to FY2029 delivery. This plan is shelved.”
Their target price is now based on 10 times FY2026 P/E versus seven times as peer valuations have risen.
Lim and Kande see that YZJ is able to “cherry pick” orders with higher average selling prices (ASP), as yards, such as new Yangzi and Xin Fu, are largely full. Hong Yuan Yard is also almost full, with delivery of its first vessel in FY2027.
They write: “Although management is seeing stiffer competition from domestic yards that expanded capacity and prices of ships are dipping slightly, we are not alarmed as global yard capacity is tight.”
YZJ also intends to charter out the first liquefied natural gas (LNG) carrier built as a proof of concept in the industry.
Re-rating catalysts noted by Lim and Kande include the ebbing of trade tension, stronger-than-expected gross margins and order wins. Conversely, downside risks include order cancellations and a surge in steel costs. — Douglas Toh
Ever Glory United Holdings
Price target:
PhillipCapital ‘buy’ 8.1 cents
Impressive track record
PhillipCapital analyst Yik Ban Chong has initiated a “buy” call on construction firm Ever Glory United Holdings, a Singapore-based mechanical and electrical (M&E) engineering service provider. M&E services, which contribute over 95% to the company’s 1HFY2025 revenue, include air-conditioning, electrical, fire alarms, plumbing and gas systems.
Chong has also given Ever Glory a target price of 8.1 cents, representing an upside of around 42% from the stock’s last-traded price of 5.7 cents.
“We expect Ever Glory to grow its order book from the increased number of private tenders in Singapore, such as schools, private condominiums, hotels and mixed-use developments,” Yik writes in his Aug 12 report, adding that the trailing 12-month contracts awarded in the city-state increased 68% y-o-y in May.
Chong also notes the company’s “impressive” track record of securing and completing several M&E contracts over the past five years. Such contracts include a $21.8 million industrial project at PSA’s maintenance base and a private residential project worth $7.3 million.
Over the past three years, the company was also able to deliver an average net profit margin of 10.8%, which is “well above the low-to-mid-single-digit average typically seen among Singapore-listed construction companies”.
The acquisition of Guthrie Engineering, which was completed in July, will also bring about more tender opportunities for Ever Glory, says Chong. The former has a solid track record in various landmark projects such as Marina Bay Sands and Jewel Changi Airport.
“The acquisition supports Ever Glory’s plans to grow its M&E engineering business and expand into switchboard and other manufacturing,” Chong writes. “We believe the acquisition would allow Ever Glory to bid for higher-value projects in the future, such as Changi Airport T5, Integrated Resorts, hospitals, and data centre projects in Singapore.”
The Building and Construction Authority’s (BCA) projected total construction demand of $39 billion to $46 billion annually from 2026 to 2029 is also a plus.
“At the midpoint of $42.5 billion, this is a 23% increase compared to the average construction contracts awarded from 2021-2024 at $34.5 billion,” Chong writes. “We believe the contracts awarded in the medium term are suitable for Ever Glory to tender.”
The analyst is forecasting the company’s FY2025 earnings to be at $9.1 million with a dividend yield of 3.1%. — Felicia Tan
DFI Retail Group
Price target:
RHB Bank Singapore ‘buy’ US$4.05
Earnings recovery, bumper special dividend
RHB Bank Singapore is keeping its “buy” call on DFI Retail Group, while issuing a new target price of US$4.05 ($5.79) from US$3.09.
Analyst Alfie Yeo says: “We remain positive on DFI Retail Group’s earnings recovery prospects and attractive valuation, and anticipate net profit to recover this year.”
“Its dividend yield is decent due to parent company Jardine Matheson Holdings’ practice of uplifting dividends back to the group level,” he adds. During the group’s latest 1HFY2025 earnings ended June, it declared a special dividend of 44.3 US cents. This is on top of the 3.5 US cents in the interim dividend declared. While this came as a surprise, Yeo notes that this helps to return excess cash back to shareholders and Jardine Matheson.
The way Yeo sees it, 1HFY2025 core earnings have continued to recover. Underlying profit grew 39% y-o-y to US$105 million, coming in within expectations. Revenue was flat at US$4.4 billion, with growth in health and beauty, but offset by declines in convenience, food and home furnishing segments. Underlying operating profit stood at US$174 million, 3.8% higher y-o-y.
DFI has raised the lower end of its underlying profit guidance from US$230 million to US$250 million, while maintaining the higher end of its forecast at US$270 million. “Our earnings estimates are unchanged since 1HFY2025 earnings are in line,” adds Yeo.
DFI has recently divested Robinsons’ Retail Holdings (RRHI) to facilitate its strategy of divesting minority positions and redeploying capital to support the growth of its subsidiary businesses for higher returns. The transaction has also helped to unlock shareholder value. It will deploy its divestment proceeds following its capital allocation strategy and long-term growth plans. — Samantha Chiew
