CGS International ‘add’ 33 cents
Higher energy costs to bite
William Tng of CGS International has kept his “add” call on Sanli Environmental (SGX:1E3
) . However, citing threats from higher energy costs, he has cut his target price from 47 cents to just 33 cents.
In his April 23 note, Tng says that Sanli’s 2HFY2026 earnings will be negatively impacted by higher labour costs and raw material price increases for some of its legacy Covid-era projects nearing completion.
See also: RHB and PhillipCapital keeps ‘buy’ on Elite UK REIT following recent 1QFY2026 business updates
This likely includes a mechanical, electrical and instrumentation control and automation portion of the Tuas Water Reclamation Plant contract won by the group in June 2020, he says.
“In addition, since the US-Iran conflict, oil prices have trended higher, resulting in cost increases across various industries. Sanli’s projects are mainly fixed-cost, with limited ability to pass on cost escalations to its customers.
“However, the recent government measures to share the additional cost burden with suppliers involved in critical public projects could alleviate some of this cost pressure,” he adds.
See also: Tng of CGSI raises ISDN's target price to 96 cents on resilient industrial automation business
Even so, Tng warns that Sanli’s gross margin for FY2026 to FY2028 will remain under pressure. As such, he has reduced his gross margin assumptions by 0.6 percentage points to 1.1 percentage points, leading to a 15.8%–27.9% reduction in his earnings-per-share forecasts.
Tng warns that there are concerns about profit margins arising from the higher-cost environment since the US-Iran conflict.
There is also a risk of liquidated damages from a dispute raised by an unnamed “major customer”, with discussions to resolve this matter amicably could stretch into FY2027.
As a result, based on this reduced earnings forecast and an earnings multiple of 16 times, Tng has derived a new target price of 33 cents.
Nonetheless, Tng is reiterating his “add” rating, given its earnings-per-share growth driven by its order book, which is still projected at 77% for FY2027 despite his earnings cuts. — The Edge Singapore
Oversea-Chinese Banking Corp
Price target:
For more stories about where money flows, click here for Capital Section
RHB Bank Singapore ‘buy’ $24.65
NIM pressure aside
RHB Bank Singapore has raised its target price for Oversea-Chinese Banking Corp (OCBC) (SGX:O39) to $24.65 from $23.45, even though 1QFY2026 patmi, to be announced on May 8, is seen as “marginally” lower y-o-y due to a lower net interest margin (NIM), but up q-o-q following a seasonally slower fourth quarter.
“In our view, OCBC’s solid balance sheet and sound asset quality metrics offer investors a good defensive hideout while still benefiting from the influx of liquidity and wealth flows into the country,” says RHB.
RHB expects net interest income in 2026 to decline “slight to moderate” as guided, due to NIM pressure. On the other hand, continued asset growth from strong liquidity flows will provide some cushion.
Loan growth continues to be driven by OCBC’s preferred segments and sectors, such as renewables, tech, media and telecoms. That said, with the Middle East conflict, clients could take a wait-and-see stance and delay drawdowns, according to RHB, citing OCBC.
Meanwhile, the bank has minimal exposure to the Middle East, with just 2%–3% of total loans. However, visibility into second- and third-order impacts is limited due to the various scenarios that could unfold. “So far, management said it is still too early for downgrades and, hence, there have been no specific provisions relating to the Middle East,” says RHB.
In line with seasonal trends and continued liquidity inflows, OCBC is set to see a q-o-q pick up in wealth fees. The bank has seen some Middle East money come in, but the amount is small, says RHB.
Meanwhile, OCBC remains “watchful” of the commercial real estate (CRE) space, particularly in the mid-tier segment in North Asia, while its US CRE exposure has remained stable.
OCBC does not have any direct exposure to the private credit space, but did not rule out minor indirect exposure through clients.
According to RHB, OCBC has also reiterated that it will complete its $2.5 billion capital return plan in FY2026.
Of this amount, $1.5 billion had been returned via special dividends in FY2024 and FY2025. Of the remaining $1 billion set aside for share buybacks, some $780 million remains unutilised.
“If it is unable to utilise this for buybacks fully, OCBC will return the funds to shareholders via special dividends,” says RHB. — The Edge Singapore
Soon Hock Enterprise Holding
Price target:
uSmart ‘buy’ 72 cents
Potential re-rating ahead of Skye@Tuas launch
uSmart analyst Ng Xin Yang has initiated a “buy” call on Mainboard-listed Soon Hock Enterprise (SGX:SHE) with a 12-month target price of 72 cents.
Ng’s target price implies a total return of around 19%, including the company’s FY2026 dividend yield of 5.8%. It is also valued based on a 30% discount to Soon Hock’s gross residual net asset value of $319.5 million. The company’s financial year ends on Dec 31.
“Soon Hock Enterprise is a Singapore pure-play strata industrial developer with a visible development pipeline of approximately $979 million in GDV (gross development value) extending to FY2029,” Ng writes in his April 20 report.
He adds that FY2025 marked a “decisive inflexion” for the firm, with earnings up by 10.6 times to $37.9 million. Revenue in the same period surged by 27.9 times to $227.9 million.
Looking ahead, near-term catalysts include the launch of Skye@Tuas, the firm’s flagship project slated for 2Q2026. The nine-storey development will comprise 247 industrial and 62 commercial units, with a GDV of $354 million.
Ng says the project is structurally “well-positioned” given its location opposite Tuas Link MRT, within Singapore’s fastest-growing logistics corridor, and the limited competing multi-user industrial supply in the area.
Other catalysts include the renewal of the mixed-use workers’ dormitory and industrial property at Jalan Papan, which provides a source of recurring income.
Soon Hock’s growing freehold land bank, including sites at 20 Shaw Road and Senang Crescent, as well as the newly acquired Kewalram House, provides further upside, with the firm’s visible pipeline extended to FY2029 and beyond. This optionality, notes Ng, is not yet reflected in the current share price.
Following its temporary occupancy permit for Stellar@Tampines in FY2025, Soon Hock ended the year with $160 million in cash, up from $18.6 million a year earlier. Net gearing also fell to 34.6% as at end-FY2025. By FY2027, Soon Hock is expected to transition to net cash, making this an “unusual combination of financial strength and pipeline depth for a developer at this stage of its cycle”. — Felicia Tan
Ever Glory United Holdings
Price target:
CGS International ‘add’ $1.13
No delay in mega project orders
Then Wan Lin and Lim Siew Khee of CGS International (CGSI) have become more bullish on Ever Glory United Holdings (SGX:ZKX) , on the premise that the leading mechanical and engineering contractor is set to win more orders from major infrastructure projects by early next year.
From a previous target price of 90 cents, the analysts, who have an “add” call, now expect the counter to be worth $1.13.
“We understand that Ever Glory could have a part to play in mega infrastructure projects such as Changi Terminal 5 superstructure, mechanical and electrical works, for which we believe the contract value could be over $500 million,” say the analysts in their April 23 note, where they have raised their FY2027 order win projection from $400 million to $650 million.
Citing their own channel checks, most of the ongoing local infrastructure tenders are progressing, unaffected by current macro factors, as public tender timelines are driven mainly by evaluation and due diligence processes.
“We also see a higher possibility of Ever Glory securing key projects given the limited pool of M&E contractors with the required scale and track record locally, which should enhance pricing power, in our view,” add Then and Lim.
In addition to a larger order book, the CGSI analysts believe Ever Glory will be able to increase its gross profit margin. From FY2026 to FY2028, they expect a gross profit margin of 15.8%–16.5%, up from 15% now.
While the Iran conflict has driven up fuel costs, it has had a limited impact on the company’s existing projects, given its relatively low direct exposure to fuel as an M&E contractor.
“Key inputs such as copper cable and freight rates have seen double-digit increases year to date — but we believe margins remain largely intact for Ever Glory as these costs are typically locked-in at the point of contract award.”
In addition, they see potential margin upside to Guthrie Engineering’s existing projects — an established M&E contractor acquired by Ever Glory last July.
The upside will come from enhanced productivity and cost efficiencies, as well as stronger pricing discipline in upcoming tenders, where contractors are likely to factor in potential cost escalation for tender bids, providing additional margin buffer if cost pressures subsequently ease, according to the analysts.
And of course, the analysts see further growth potential with a tender pipeline of more than $4 billion as of February.
From an earlier valuation multiple of 12 times, based on the average of M&E players in Singapore, Then and Lin now value the company at 15 times FY2027 earnings, which is 1.5 standard deviations above its historical three-year mean and in line with regional peers.
The analysts believe this higher multiple is justified given Ever Glory’s robust earnings growth, along with improving visibility into its margin resilience and order book expansion.
Possible re-rating catalysts include stronger-than-expected order wins, margin expansion, share buybacks and accretive M&As.
On the other hand, key downside risks include sharper-than-expected cost escalation and delays in project awards or execution. — The Edge Singapore
UI Boustead REIT
Price target:
UOB Kay Hian ‘buy’ $1.16
Maiden development project after listing
Jonathan Koh of UOB Kay Hian has maintained his “buy” rating and $1.16 target price on newly-listed UI Boustead REIT (UIBREIT) (SGX:UIBU) following its announcement of its first co-development project.
According to UIBREIT, on April 24, it acquired a 24.26% effective interest in the co-development project, UIB Konan Phase 3, to build two modern logistics facilities with a total net leasable area of 508,880 sf in Konan City, Shiga Prefecture, Japan.
Its partners in this project are its sponsor, UIB Holdings (1.38%), Fraxtor UIB Konan (50.1%) and a Tokyo-listed corporation (24.26%).
With an interest rate of 24.26%, UIBREIT’s effective total investment value will be $20.8 million, and its capital commitment will be $7.3 million. Upon completion by 2QFY2027, the property will be managed by UI Japan, the sponsor’s wholly owned subsidiary.
The project is adjacent to UIB Konan Phase 2, which UIBREIT already owns, creating operational synergies.
The area benefits from strong logistics demand and low vacancy rates due to its position as a key overland gateway connecting Osaka and Nagoya — two of Japan’s largest metropolitan regions.
According to Koh, the project is aligned with UIBREIT’s strategy of pursuing selective value-accretive and risk-mitigated development projects.
“By investing at the development stage, UIBREIT was able to capture development margins with an estimated yield on cost of 4.8%, which compares favourably with its projected Japan portfolio yield of 3.6%,” he says.
From Koh’s perspective, this is a relatively small investment with portfolio AUM expanding marginally by only 1.1%, and its aggregate leverage is expected to increase by 0.7 percentage points to 38.6% upon completion of the development projects anticipated in 2Q27.
Under the terms of this development, UIBREIT has an option to acquire the remaining 75.74% interest at a 4% yield after the two logistics facilities are completed, giving it the flexibility to deepen its long-term exposure in this region.
According to Koh, UIB Konan Phase 3 can help capture spillover demand from 3PL logistics providers and manufacturers operating in the vicinity, as well as from existing tenants currently housed at UIB Konan Phase 1 and Phase 2.
The development is poised to secure a 70% pre-commitment from three potential tenants. At UIB Konan Phase 2, occupancy has improved by 4 ppt to 81%, and UIBREIT aims for 90% by June.
Despite this overseas commitment, Koh points out that UIBREIT is maintaining its primary focus on Singapore, which accounted for 70.4% of portfolio AUM post-transaction, while exposure to Japan expanded by 0.8 ppt to 29.6% of portfolio AUM.
Meanwhile, UIBREIT will have a pipeline of other co-developments, including a built-to-suit project in Singapore. According to Koh, there are value-accretive AEI opportunities, such as the $3 million conversion of AUMOVIO Building Phase 3 on Boon Keng Road from a single-tenant property to a multi-tenant property.
Koh estimates that UIBREIT provides an attractive DPU yield of 8.1% for FY2027 and is keeping his “buy” call and $1.16 target price. — The Edge Singapore
