DBS Group Research has maintained its “fully valued” call and 52 cents target price on Aztech Globalafter the manufacturer reported weaker-than-expected 1QFY2025 results.
For 1QFY2025 ended March, Aztech reported earnings of $1.5 million, down 90.6% y-o-y, on the back of a 67.3% drop in revenue, as new customer wins were not enough to offset the decline from its key customer.
Excluding the interest income, the group would have recorded a net loss of about $1.1 million, says DBS in its April 16 note.
On a positive note, the group generated net cash of $18.6 million from operating activities with tight working capital management, adds DBS.
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Aztech is further building on its capabilities located in its Malaysia facility, positioned as a key site to support supply chain diversification.
A new automated production line is on track to be commissioned in 2QFY2025, with the facility already securing five new customers from the consumer, healthtech, and industrial segments and commercial production is expected to start in 2HFY2025.
However, contributions will likely be modest in the near term. With a significant drop in orders from the key customer and limited short-term uplift from new wins, DBS expects further downside risks to its FY2025 forecasts, which is already the lowest in the street.
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The company’s share price, which closed at 73 cents on April 15, is now held up by a dividend entitlement of 10 cents that will go ex-dividend on April 17, says DBS. — The Edge Singapore
Singapore Technologies Engineering
Price target:
RHB Bank Singapore ‘buy’ $7.80
Further upside besides $1.4 billion Taiwan MRT contract
Shekhar Jaiswal of RHB Bank Singapore has reiterated his “buy” call and $7.80 target price for Singapore Technologies Engineering(ST Engineering) after it won a $1.4 billion contract to provide turnkey rail services for the new Taichung MRT Blue Line in Taiwan.
This latest win adds to the company’s all-time high outstanding order book of $28.5 billion, providing three years of revenue visibility.
“With local operations in its global business locations, ST Engineering’s business should be relatively defensive and a bit shielded from the escalating trade war.
He expects the company to deliver its 8.6% revenue and up to 13.6% profit CAGR targets for FY2024 to FY2029.
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Jaiswal says that while his FY2029 estimates are below the company’s own target, there could be upside risks to the international defence business with potentially more order wins and higher margins.
“Upside risks could also come from lower interest costs amidst more aggressive debt repayment and falling interest rates,” says Jaiswal.
He also notes that ST Engineering is looking to recycle capital by transitioning its aviation asset management business to a fund structure.
“This could also support faster growth in assets under management and bring greater revenue synergies to its MRO and passenger-to-freighter conversion business,” he says.
ST Engineering has gained more than 40% since the start of the year, staying steady at current levels even as other stocks swoon over uncertainties caused by US tariffs.
Even so, Jaiswal says ST Engineering’s valuation is not expensive at the current level.
“While the current forward P/E is above ST Engineering’s historical forward valuation, we believe this does not adequately capture the strong growth that the company is expected to deliver over the next five years vs what it has delivered in the past.
“For investors looking at capital return, we believe there is scope for higher dividend payments as we assess the yield of free cash flow to be significantly higher than the dividend yield throughout the forecast period,” says Jaiswal. — The Edge Singapore
Soilbuild Construction
Price target:
PhillipCapital ‘buy’ with 93 cents target price
Clear earnings growth visibility
Yik Ban Chong of PhillipCapital has initiated coverage of Soilbuild Construction Groupwith an “accumulate” call and a target price of 97 cents.
In his April 14 note, Chong notes that the company’s order book of $1.26 billion as at December 2024 will provide visibility for revenue and profit growth over the next two financial years.
For FY2025, Chong estimates that Soilbuild can grow its revenue and earnings by 20% and 28% y-o-y, thanks to progress payments.
The most notable contract won by Soilbuild was a $647.5 million deal to help build PSA Tuas Port.
According to Chong, this contract is one-off as Soilbuild does not usually tender for contracts of this size.
Nonetheless, the analysts expect Soilbuild to continue to secure tenders involving similar warehousing facilities in Singapore.
According to Chong, Soilbuild has an edge in securing tenders because of its Building Information Modelling (BIM) capabilities and environmentally sustainable practices.
“We expect future tenders to come from the private sector, especially low-carbon and/or high-specification industrial buildings such as those with high floor-to-ceiling heights,” he says.
In addition to construction contracts, Soilbuild operates a prefabrication hub — one of only five so-called integrated construction and prefabrication hubs operating today.
According to Chong, due to the ramp in HDB BTO flats, Soilbuild’s precast and prefabrication segment turned profitable in FY2024, recording $12.3 million in operating profits, up from an operating loss of $0.7 million in FY2023.
“We expect the continuous ramp in HDB BTO projects to drive FY2025 operating profits of the precast and prefabrication segment by around 22%,” he says.
Chong points out that the overall construction industry remains vibrant. BCA forecasts construction demand from 2026 to 2029 to be $42.5 billion at midpoint, 23% higher than the previous four-year forecast of $34.5 billion at midpoint.
Other key projects besides Changi Airport Terminal 5 include the expansion of Marina Bay Sands Integrated Resorts and MRT lines and the construction of high-specification industrial buildings and HDB BTO flats.
Chong’s “accumulate” call and 97 cents target price are based on 3.5 times FY2026 earnings estimate, a valuation level below the company’s historical 5.9 times earnings between FY2022 and FY2024. — The Edge Singapore
Grand Venture Technology
Price target:
DBS Group Research ‘buy’ $1.12
Skirting tariff headwinds, maintains revenue guidance
DBS Group Research has kept its “buy” call and $1.12 target price on Grand Venture Technologyafter the manufacturer reaffirmed its 1HFY2025 revenue guidance amid a wider selldown of tech stocks.
According to GVT, US exposure accounted for less than 10% of its revenue. The bulk of its output is shipped from Singapore, which is hit with a baseline 10% tariff that is lower than other regional markets.
The bulk of GVT’s end-demand comes from semiconductor, life sciences and aerospace customers in the rest of Asia and Europe.
“Management’s decision to maintain its 1HFY2025 revenue range at $90 million to $96 million signals confidence in both order visibility and production efficiency,” says DBS.
Grand Venture is actively engaging with its customers to reroute most US-bound shipments to manufacturing facilities in Asia, thereby mitigating potential delays or added costs.
“Meanwhile, the remaining portion of exports comprises so-called new product introductions, which are limited in volume and expected to scale regionally over time in Asia,” adds DBS.
“The combination of sectoral and geographic diversification, alongside strong execution agility, supports a sustained growth trajectory through FY2025, even as tariff risks evolve.
DBS cautions that a key area to watch is the potential for sector-specific tariffs on the semiconductor supply chain. These tariffs introduce indirect risks via softer customer demand or pricing pressure.
“While tariff details remain fluid, assuming a 25% tariff on semiconductor-related exports in line with sectoral precedents under the Trump administration, 50% of affected US-bound shipments can be rerouted to Asia, and the remaining tariff costs are partially absorbed (50%), we estimate a 4%–8% drag on earnings, depending on pass-through dynamics and customer volume retention,” says DBS.
In addition, DBS says that while Grand Venture’s China business does not have significant sourcing from China, there could be some downside bias to its margin assumptions should Trump’s broad-based tariffs contribute to an inflationary cost environment.
“Grand Venture offers compelling value, trading at 14 times FY2025 earnings and 11 times FY2026 earnings, based on April 11’s close price,” says DBS. — The Edge Singapore
Starhill Global REIT
Price target:
OCBC Investment Research ‘hold’ 46 cents
Risks to income visibility
Ada Lim of OCBC Investment Research has trimmed her fair value for Starhill Global REITfrom 50 cents to 46 cents and issued a “hold” call.
In her April 10 note, Lim points out that the REIT has locked in master and anchor leases, which can provide income visibility and downside protection.
S-REITs are perceived to be more defensive as a sector, given their locked-in leases. Starhill Global REIT, for one, has a relatively long weighted average lease expiry of 7.8 years by gross rent.
“Nonetheless, the remaining actively managed leases are not immune to a recessionary environment and macroeconomic uncertainties,” she says.
“If corporates consolidate their office space and a reduction in consumer spending hurts retailers, occupancy may dip, and this will weigh on distributions,” she adds.
In Singapore, the REIT has renewed its master lease with key tenant Toshin Development Singapore for another 12 years starting from June 8. The operator of the Takashimaya department store contributed 23.1% to its gross rent on Dec 31, 2024.
Under the new lease, the REIT will receive a base rent that is either 1% above the existing base rent or the prevailing market annual rental value as of the commencement date.
“This will provide a certain level of income visibility and downside protection, though Starhill could potentially enjoy lower rental upside from the annual turnover component of rent, which comprises a portion of Toshin’s operating income over and above agreed revenue and profit margin thresholds,” says Lim.
Meanwhile, in Malaysia, the master lease with Lot 10 Property has been extended for a third three-year term commencing July 1 with a 6% rental step-up.
Lim is leaving her forecasts but has increased her cost of equity assumption by 1.2 percentage points to 8.5% to account for heightened volatility, especially given the REIT’s exposure to high-end retail. This leads to her lowered fair value of 46 cents.
“We see the REIT’s risk-reward profile being fairly balanced at the time of writing, with the forecasted distribution yield of 7.9% in FY2025 offsetting what we think are limited growth opportunities for the counter,” says Lim. — The Edge Singapore
Sats
Price target:
CGS International ‘add’ $3.05
Lowered growth assumptions
Tay Wee Kuang and Lim Siew Khee of CGS International have kept their “add” call on Sats but with a sharply reduced target price of $3.05 from $4.35 on tempered growth assumptions.
“We think Sats could see earnings growth stall in FY3/26F as the global aviation industry faces uncertainty from the souring macroeconomic outlook,” write the analysts in their April 10 note.
They expect global air cargo demand to decline 10% y-o-y this calendar year due to the reciprocal tariffs and tit-for-tat retaliation between the US and its trading partners.
The potential economic fallout could also lead to softer global air travel demand, affecting Sats’ ground-handling and aviation catering businesses.
As of 9MFY2025 ended Dec 2024, 92% of Sats’ revenue was exposed to the aviation industry, 50% through its cargo-handling business, 26% through its ground-handling business and the remaining 16% through its aviation food business.
The International Air Transport Association saw an average y-o-y drop of 8.8% in monthly cargo demand between March 2022 and July 2023 when e-commerce volumes dropped following the pandemic.
Citing this trend, Tay and Lim estimate that Sats might see its cargo volumes drop 10% in the coming FY2026 ending March 2026 amid this trade war.
In addition, the economic downturn brought about by the trade war will likely hurt travel demand as well. As such, they assume Sats’ ground-handling business will see volumes remain flat y-o-y in FY2026.
The volume growth of its food solutions business, meanwhile, will be halved as the volume decline for aviation food is offset by the growing contribution of its non-aviation food subsegment with the ramp-up of its central kitchen operations across China, Thailand and India, which should be sheltered from global macroeconomic headwinds, they add.
Taking into account these assumptions, the analysts have trimmed their FY2026 and FY2027 earnings estimates by 13.6% and 12.8% respectively amid this “softer” business environment.
Their discounted cash flow-based target price is lowered to $3.05, implying six times FY2026 EV/Ebitda.
According to Tay and Lim, they have maintained their “add” call based on Sats’ improved cash flow generation since its acquisition of Worldwide Flight Services in FY2023.
“We also believe Sats’ growing network will position it for market share gains to support better profitability beyond FY2026,” the analysts write.
Re-rating catalysts include resilient trade volumes and resolution of tariff tensions between the US and its trade partners.
On the other hand, downside risks include a global recession that leads to a greater-than-expected decline in the aviation industry and the delayed ramp-up of utilisation at its new central kitchens, leading to softer margins. — The Edge Singapore
Singapore Exchange
Price target:
OCBC Investment Research ‘buy’ $14.09
Higher volatility, higher volume
OCBC Investment Research, citing heavier-than-average trading volume in March and expected near-term volatility, has raised its fair value for the Singapore Exchangeto $14.09 from $13.68.
In March, securities daily average value increased by 25% y-o-y to a three-year high of $29.7 billion. Several Straits Times Index component stocks reached record trading volumes of five to six times their six-month average.
“Furthermore, SGX will also benefit from increased hedging activities for its derivatives business given heightened market volatility,” says OCBC in its April 10 report.
For the year ending June, SGX has reaffirmed that costs will increase by just 2%–4% and that its capex to range between $70 and $75 million, both of which are at the lower end of its guidance.
“We view management’s focus on cost control as a positive amid current macroeconomic uncertainties.”
“Although we maintain our earnings projections for now, we lift our fair value estimate from $13.68 to $14.09 after rolling forward our valuations to 23 times our FY2026 core earnings per share forecast,” says OCBC. — The Edge Singapore
