Tabitha Foo and Derek Tan of DBS Group Research have raised their target price for GuocoLand to $2.50 from $2, citing “exciting times” ahead for its development and investment businesses.
In their Sept 1 note, where they have kept their “buy” call, Foo and Tan describe the company’s property development business as “highly resilient”, as shown by strong pre-sales across the majority of its projects. “We expect the group to further strengthen its solid track record with the launch of four upcoming projects in its landbank,” say the analysts.
They also see GuocoLand as well-positioned to capitalise on the flight-to-quality trend in the CBD Grade A office segment. Tight supply-demand dynamics continue to support near-full occupancies and positive rent reversions across its three prime office assets.
A potential catalyst for GuocoLand, whose stock has gained by nearly a third year to date but is still trading at about half its net asset value (NAV), is the potential of restructuring to crystallise value. “Given its growing portfolio of commercial assets, a potential conversion into a ‘stapled security’ could serve as a significant share price catalyst.
See also: Could UOL list a REIT?
“Notably, management has indicated an openness to exploring monetisation opportunities at the right time to unlock further value from its portfolio,” state Foo and Tan.
To value this stock, they have applied a 45% discount to their revalued NAV (RNAV) of $4.50, citing how this stock is relatively illiquid compared to its larger developer peers. Nonetheless, their previous discount was 50%.
The analysts say their RNAV valuation has taken into account fair value estimates for its major investment properties and realisable values for its major development projects, excluding those in China. — The Edge Singapore
See also: RHB keeps ‘buy’ on CSE Global at raised target price of 86 cents from 63 cents previously
Tiong Woon
Price target:
UOB Kay Hian ‘hold’ 73 cents
Mobile price repair, data centre growth
Tiong Woon Corp, ranked as the 15th largest crane operator in the world, has reported FY2025 earnings in line with expectations. However, given how the company is incurring higher capex, which is weighing on near-term cash flow and gearing, Heidi Mo and John Cheong of UOB Kay Hian have downgraded the stock from “buy” to “hold”.
Yet, given how Tiong Woon’s share price has gained more than a third in the past six months, they have raised their target price to 73 cents from 64 cents.
In 2HFY2025 ended June, Tiong Woon reported revenue of $164 million, up 14% y-o-y. However, earnings dipped by 4% y-o-y to $7 million on margin pressure and less favourable project mix. For the whole of FY2025, earnings grew by 6% y-o-y to $19 million, which was 98% of their estimates.
In FY2025, to grow its fleet, the company incurred higher capex of $65.5 million, up 5% over FY2024, which led to higher borrowings of $111.8 million, up 20% y-o-y and lower cash balance of $62.6 million, down 21% y-o-y.
Despite the lower 2HFY2025 earnings and cash balance, the company plans to increase its final dividend to 1.75 cents from 1.5 cents, equivalent to a payout ratio of 21% from 19%.
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From the perspective of Mo and Cheong, the higher dividends is an indication of the management’s confidence in sustainable earnings.
“Tiong Woon remains confident of resilient demand across its core markets, underpinned by petrochemical, semiconductor, infrastructure, and construction activity. Fleet renewal and expansion should further drive efficiency and strengthen its competitive edge,” they add.
For the current FY2026 and coming FY2027, Mo and Cheong have lowered their margin assumptions by around two percentage points due to the expected continued cross-hiring of equipment to meet project demand.
On the other hand, they have raised their revenue forecasts by around 12% on stronger demand across Singapore, India, Saudi Arabia and Thailand. As a result, their FY2026 earnings forecast has been trimmed by 4% and FY2027’s by 7%.
Their new target price of 73 cents is based on 0.5 times FY2026 P/B, which is 0.5 standard deviations above its historical 15-year average P/B, up from 0.45 times previously, which is its historical mean.
“Looking ahead, successful deployment and utilisation of new cranes, coupled with margin recovery as cross-hiring eases and higher-tonnage cranes are progressively deployed, could serve as catalysts for an upgrade in the medium term,” the analysts say. — The Edge Singapore
StarHill Global REIT
Price target:
RHB Bank Singapore ‘buy’ 60 cents
Undervalued mid-cap despite market challenges
Vijay Natarajan of RHB Bank Singapore has maintained his “buy” call on Starhill Global REIT, calling it an “undervalued midcap” counter that has delivered stable distribution per unit in recent years despite “market challenges”. With prospects of higher DPU ahead, he has raised his target price from 55 cents to 60 cents.
Natarajan’s optimism is based on how the REIT, which is 70% exposed to Singapore, will benefit from falling domestic rates and economic recovery.
Specifically for the REIT, there is upside potential from asset enhancements being made at Wisma Atria, where car park space on level 7 is being converted into approximately 3,250 sq ft of office space.
The work for this project is largely completed and it is set to become operational this quarter. The REIT is expecting a return on investment of more than 8% on the estimated $4 million project cost.
This move comes as the REIT rationalises its Wisma Atria office exposure with the divestment of Level 12 office strata lots for $16.1 million, which is a 22% premium to valuation. The REIT manager is also revamping the taxi drop-off point at Wisma Atria to create more shopfront for tenants.
Next, a new 12-year master lease with Toshin for Ngee Ann City has been signed and took effect in June. Rental contribution from Toshin is expected to account for 24% of StarHill Global REIT’s 2HFY2025 total and is set for a minimum 1% increase, with additional upside from the annual profit-sharing arrangement.
Portfolio-wide, Natarajan estimates that the REIT is poised to achieve rent reversion in the low- to mid-single digits for its Singapore office and retail spaces, representing some moderation from the double-digit figures seen thus far this year.
In Adelaide, where the REIT owns the Myer Centre, key tenant Technicolor Group, which accounted for 0.9% of 2HFY2025 net property income, terminated its lease in April. StarHill Global REIT has secured a new tenant, occupying two-thirds of the vacated space, for 10 years.
Natarajan has tweaked his FY2026 and FY2027 DPU assumptions by 0% to 1% by factoring in lower cost of equity assumptions, modest gearing and divestment efforts. — The Edge Singapore
StarHub
Price target:
Maybank Securities ‘buy’ $1.35
Upgrade with Simba-M1 deal restoring price discipline
Maybank Securities has upgraded StarHub to “buy” from “hold”, saying Singapore’s telecom market is set for greater pricing discipline following Simba’s acquisition of M1.
“While the Simba-M1 mergedco may target segments with higher average revenue per user (ARPU), initial constraints from high leverage and limited synergies suggest price discipline will dominate near-term dynamics,” wrote analyst Hussaini Saifee in a Sept 3 note.
As such, he has raised his FY2026 and FY2027 mobile revenue to grow by 5% to 7%, and ebitda estimates by 3-6%. After applying his discounted cash flow (DCF) long-term growth assumption of 1% from 0.5% previously, he derived a target price of $1.35.
Investors should temper expectations around Simba’s ability to disrupt. “While investors see Simba as a lean and unencumbered play, we don’t see it the same way post M1 acquisition. With M1 contributing about 75% of merged entity revenues, legacy exposures such as roaming and caller ID remain broadly in line with incumbents,” notes the analyst.
He also flags structural constraints for the mergedco. ARPU levels of M1 and its rivals have “largely converged”, while network performance gaps are unlikely to shift consumer behaviour in Singapore’s WiFi-saturated market.
Saifee expects mergedco’s leverage to rise to about four times net debt/ebitda. Meanwhile, StarHub is positioned to take advantage of market shifts, particularly through pressure on mobile virtual network operators (MVNOs).
Global precedents support this view, with telco consolidation typically lifting industry revenue growth by 4% to 6% annually as competition normalises.
“Based on our analysis of global case studies above, we expect mobile revenue growth in Singapore to improve to 4% to 5% per over 2026 to 2027 on potential competitive rationalisation.”
He adds that StarHub trades at –1 standard deviation PE/EV/Ebitda but offers a defensible 6% dividend yield. — Nurdianah Md Nur
