Adrian Loh of UOB Kay Hian has maintained his “buy” call and raised his target price for Hong Leong Asia (HLA) from $2.63 to $2.82, citing multiple growth drivers across its various business units.
Loh’s colleague, Heidi Mo, had just raised the target price for steel supplier BRC Asia on Sept 5 from $3.29 to $4.69. BRC Asia, which is a fifth held by HLA, controls a market share between 55% and 60% in Singapore and is a “prime beneficiary” of Singapore’s rising construction activity.
In addition, BRC has recently acquired a 55% stake in related company Southern Steel Mesh, which has a 60% market share in Malaysia for welded wire mesh.
In China, HLA controls New York-listed engine maker China Yuchai International, which is deemed to be outperforming its larger peer in China. Loh notes that in the recent 1HFY2025 results season, China Yuchai posted a gross margin of 13.3% and a net profit growth of 52% y-o-y, substantially higher than Hong Kong-listed Weichai Power.
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“It appears that China Yuchai’s better pricing discipline, cost structure, product mix, as well as lower exposure to lower margin segments, have led to its outperformance,” says Loh.
For China Yuchai, the growing proliferation of data centres is a source of new demand as the engines produced are used to power back-up generators.
Loh points out that while China Yuchai sold only 1,000 units to its data centre customers out of more than 250,000 units in 1H2025, “margins and demand are materially higher and thus could be an interesting growth engine”.
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HLA, with its other key business in manufacturing and selling cement, is seeing a positive impact from Singapore’s infrastructure spending.
Loh’s higher target price for HLA, based on a sum-of-the-parts methodology, reflects UOB Kay Hian’s own higher target price of $4.69 for BRC Asia.
Loh is valuing the powertrain segment by using a target FY2026 P/E multiple of 12 times, which is in line with the target multiple used for Weichai Power.
He is keeping the valuation for the building materials segment unchanged for now, with an 8.4 times FY2026 ebitda multiple, which is in line with the company’s global comparable companies. “In our view, HLA’s valuation multiples appear inexpensive as the company is trading at FY2026 P/E and EV/Ebitda of 12.8 times and 7.0 times, respectively,” says Loh.
Stripping out the cash, the P/E is even lower at 5.5 times, based on his FY2026 earnings estimate, while delivering a return on equity of over 12%.
Judging by HLA’s strong free cash flow generation in 1HFY2025, Loh says it may declare a higher dividend than the 5 cents per share that he now projects. — The Edge Singapore
Marco Polo Marine
Price target:
RHB Bank Singapore ‘buy’ 8.5 cents
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Accelerating growth ahead
Alfie Yeo of RHB Bank Singapore has kept his “buy” call on Marco Polo Marine, on the accelerating growth outlook with its new dry dock in business, and four new vessels to generate income.
In its most recent 3FY2025 results, the company reported higher-than-expected gross margin, which should help sustain attractive charter rates for its newly-launched commissioning service operation vessel (CSOV), along with a higher utilisation rate for the rest of its fleet.
In 9MFY2025, the CSOV and three newly purchased crew transfer vessels contributed $11 million out of the total revenue of $54 million.
“We expect Marco Polo Marine’s growth to accelerate, as its CSOV and three new CTVs will contribute a full year’s revenue from FY26 onwards,” says Yeo in his Sept 16 note.
In addition, the company’s fourth dry dock is set to commence operations in the current 4QFY2025 and is seen to contribute to a full year’s revenue as it ramps up utilisation over FY2026. “As such, we anticipate growth to accelerate in FY2026,” says Yeo.
Yeo is keeping his revenue projections for FY2026 and FY2027. Still, he has raised his FY206 earnings by 12% and FY2027 by 13% after factoring in stronger margins at the current run rate, to account for stronger-than-expected CSOV margins and higher utilisation of vessels.
Yeo notes that Marco Polo Marine’s share price has re-rated from 6 times FY2025 P/E to 12 times, along with the broader market, since his last update, on optimism over positive fund flows.
In view of the re-rating, he now values the stock at 11 times FY2026 P/E from 9 times FY2026, resulting in a higher 8.5 cents, from 7.6 cents.
Yeo qualifies that his forecasts and target prices are premised on improved charter rates, as well as stronger utilisation rates.
“We believe any underperformance in these aspects represents downside risks to our earnings estimates and target price,” he adds. — The Edge Singapore
Pan-United Corp
Price target:
UOB Kay Hian ‘buy’ $1.33
Healthy concrete demand
UOB Kay Hian (UOBKH) analyst Heidi Mo is maintaining her “buy” call on Pan-United Corporation at a raised target price of $1.33 from $1.06.
In her Sept 10 report, Mo notes that the group has reinforced its position as Singapore’s leading ready-mix concrete (RMC) supplier, commanding a market share of around 40%.
In 1HFY2025 ended June, revenue rose 4.3% y-o-y to $401.1 million, supported by higher RMC volumes. Net profit grew 11% y-o-y to $20.6 million, despite foreign exchange (forex) losses and higher depreciation. In comparison, gross margins expanded 2.8 percentage points (ppts) to 24.4%, underpinned by upstream integration and operational efficiencies.
“Its AiR Digital logistics platform, which optimises fleet productivity and reduces idle time, has been instrumental in sustaining margin gains even amid rising manpower and rental costs,” writes Mo.
Thus far, Pan-United has secured $430 million worth of ready-mix supply contracts for Changi Airport Terminal 5, which will span five years. This, Mo notes, will enhance earnings visibility.
The group is also engaged in a wide range of projects, including public housing launches, healthcare facilities, mixed-use developments and MRT expansions. Mo writes: “With its scale and entrenched customer relationships, Pan-United remains the preferred partner for both public and private sector developers.”
In a bid to capture rising demand, Pan-United is investing heavily in capacity, with a capital expenditure of around $60 million planned this year for its new Jurong Port Integrated Construction Park batching plant, slated to begin operations by year-end or early next year.
The analyst notes that this “state-of-the-art” facility is expected to boost supply reliability, enhance cost efficiency and raise barriers to entry in the local RMC market.
With Singapore’s Building and Construction Authority (BCA) forecasting some $47 billion to $53 billion of contracts to be awarded this year, up from $44.2 billion last year, RMC demand is projected at 13.0 million cubic metres to 14.5 million cubic metres this year, which is “broadly flat” to “moderately higher” y-o-y.
Mo writes: “Growth will be led by public sector infrastructure, which now accounts for about 60% of total demand.”
The group is also strong in its balance sheet, with a net cash position of $69.8 million as at 1HFY2025, giving it “ample capacity” to fund expansion while rewarding shareholders. For the period, Pan-United declared a 43% higher interim dividend of one cent per share, to which Mo notes continues a “multi-year trend” of dividend growth.
“With strong cash generation, low gearing, and industry leadership in sustainable concrete solutions, Pan-United is well-positioned to continue delivering steady shareholder returns,” adds the analyst.
Her revised valuation is rolled forward to FY2026 and is based on a 17 times FY2026 P/E, representing a 16% premium to regional peers’ average of 14.6 times. She writes: “We believe this premium is warranted given Pan-United’s superior profitability and return on equity of 18%, backed by its dominant market share and resilient margins.
“The stock is currently trading at 14 times FY2026 P/E, offering upside potential as it continues to benefit from Singapore’s infrastructure upcycle and its market leadership in low-carbon concrete,” concludes Mo.
She has trimmed her FY2025, FY2026 and FY2026 earnings forecasts by 10%, 11% and 16%, respectively, after refining our margin assumptions.
Share price catalysts noted by her include earnings-accretive acquisitions, better-than-expected numbers of infrastructure projects awarded or higher-than-expected dividends. — Douglas Toh
SIA Engineering
Price target:
PhillipCapital ‘buy’ $3.83
MRO upcycle, potential privatisation
Liu Miaomiao and Paul Chew of PhillipCapital have initiated coverage on SIA Engineering with a “buy” call and $3.83 price target, on expectations that it is a “key beneficiary” of surging demand for so-called maintenance, repair and overhaul (MRO) services.
SIA Engineering Company (SIAEC) is 77% held by Singapore Airlines, and serves over 80 international carriers and aerospace manufacturers with a worldwide network of 25 subsidiaries and joint ventures across nine countries.
According to Liu and Chew in their Sept 15 note, MRO upcycles are driven by fast-growing travel, ageing fleets and delayed aircraft deliveries.
Upside will come from capacity expansion too, with SIAEC holding an 80% market share in Singapore’s line maintenance and 30% in engine MRO.
A significant chunk of SIAEC comes from parent company SIA, which, in April 2025, signed a new contract worth $1.3 billion.
For the current FY2026 ending March 2026, analysts expect SIAEC’s patmi to rise 18.2% y-o-y to $165.7 million, driven by a one percentage point improvement in operating margin as the SIA contract was repriced.
Driven by robust MRO demand and improving profitability, Liu and Chew expect the company to pay a dividend of 10 cents this year, translating into a yield of 3.2%.
The confidence over the dividend payout is further boosted by SIAEC’s strong cash position of $674 million and a free cash flow yield of 5.7%.
As the company operates across multiple markets through its network of joint ventures, revenue is generated in various currencies, thereby exposing SIAEC to risks associated with unfavourable currency fluctuations.
The way Liu and Chew see it, there is also a “risk” that SIAEC will be privatised. Parent company SIA, itself majority held by Temasek Holdings, could consider privatising SIAEC, given its 77% stake as the largest shareholder and deems it a “strategic asset”.
Yet, as a listed company, SIAEC is subject to costs and scrutiny, including public reporting, investor relations, and market expectations, which SIA may prefer to avoid for a non-core subsidiary, suggest Liu and Chew.
The analysts’ target price of $3.83 is derived from a relative valuation approach, after applying a 25 times forward-looking P/E for FY2026. The valuation multiple is pegged at +1.1 standard deviations above SIAEC’s historical mean, reflecting its improving operating margins and robust outlook for MRO demand.
At current levels, SIAEC is trading at 21 times FY2026 earnings, with an EV/Ebitda of 29.8 times. — The Edge Singapore
UOL Group
Price targets:
DBS Group Research ‘buy’ $8.80
Citi Research ‘buy’ $9.60
Portfolio reconstitution
The planned divestment of the Kinex mall by UOL Group will have minimal impact on its earnings, but the move is still seen as a positive one by DBS Group Research, which has kept its “buy” call and $8.80 target price.
On Sept 10, the property firm announced it is selling its freehold commercial strata lots in Kinex for $375 million, booking a gain of just $2.4 million. “We view the group’s unlocking value from non-core assets and streamlining of balance sheet as positive,” says DBS on Sept 11.
DBS points out that UOL has been stepping up its portfolio reconstitution efforts. Besides Kinex, via subsidiary Singapore Land Group, it sold Stamford Court last year and the year before, its Parkroyal hotel at Kitchener Road.
The sale is an indication of UOL’s ability to monetise mature assets at fair valuations and redeploy capital towards higher-yielding opportunities, says DBS, referring to recent acquisitions, such as 388 George Street and Varley Park student accommodation.
“While gearing remains healthy and not a concern, we like that UOL is streamlining its balance sheet and focusing on its core expertise,” adds DBS, whose target price is a 50% discount to UOL’s revalued net asset value of $14.60.
Brandon Lee of Citi is similarly positive on this deal. He points out that Kinex has difficulty maximising rents given its relatively small size and “intense” competition from other nearby malls, such as City Plaza, PLQ Mall, Paya Lebar Square and SingPost Centre, all of which are within walking distance.
Lee also likes UOL for its improved gearing, where capital is redeployed to residential developments and to fund capital expenditures for large-scale commercial and mixed projects, such as the Clifford Centre, and potentially Marina Square, to generate more attractive returns.
He believes that valuations, at 0.54 P/B, remain undemanding. Lee has maintained his “buy” call and $9.60 target price, which is based on a 40% discount to his revalued net asset value (RNAV) of $16.
The 40% discount to RNAV is the same quantum applied to CDL, which, together with UOL, is what Lee calls “the most direct proxies” to the property market of Singapore.
From Lee’s perspective, four factors could help narrow the discount to UOL’s RNAV: Better-than-expected take-up for two Singapore residential launches in 2HFY2025, more details on Marina Square’s redevelopment, asset divestments and share buybacks. — The Edge Singapore
