Brokers’ Digest: Singtel, Boustead Singapore, MLT, MUST, FLCT, Hutchison Port Holdings Trust, Riverstone, ISOTeam, Zixin

The revised target price reflects stronger valuations of Singtel’s regional associates, particularly Bharti Airtel, whose shares have risen 18% since the start of the year. However, Jearajasingam notes that Singtel’s FY2026 P/E of 22.2 times is one standard deviation above its post-2012 12-month forward P/E trading range, which has marked the peaks of its P/E multiples since 2021.

Singtel’s plan to trim its 29% stake in Bharti to 24%, aligning with the Mittal family’s holding, could unlock around $8 billion in shareholder value over time. The share price has already increased 14.7% over the past month, helped by a flight to safety following global trade tariff concerns.

Further share price upside may be limited as the trade unwinds. “A key swing factor would be if buoyant Indian equity markets enable Singtel to pare down its stake in Bharti faster or at a higher price. Each INR100 [$1.53] rise in Bharti’s share price adds 12 cents to Singtel’s valuation. By contrast, a 10% uplift in Singtel’s group ebit beyond FY2026 would only add 7 cents per share,” Jearajasingam wrote in a note dated May 12.

See also: RHB keeps 'buy' call on Prime US REIT but with a reduced target price on broader economic uncertainties

He foresees Singtel’s 4QFY2025 results, due on May 22, to show “continued earnings momentum”. Singtel’s ebitda and ebit are expected to grow 6.2% and 19.7% y-o-y, respectively, lifting FY2025 core net profit to $2.52 billion, up 11.3% from a year earlier. “Sequentially, we expect results to show typical seasonality with core net profit down 5% q-o-q,” he says.

Singtel is projected to declare a final dividend per share (DPS) of 6.9 cents — an 82% payout ratio — alongside a 4.2-cent value realisation dividend (VRD), bringing total FY2025 DPS to 16.7 cents. “The key surprise, in our view, could come from a more generous VRD payment,” he adds. — Nurdianah Md Nur

Boustead Singapore
Price target:
OCBC Investment Research ‘buy’ $1.39

See also: Genting Singapore sees a soft start to the year, but how will the rest of the year fare?

New contracts bringing order book to $428 million

Lim says that when the company reported its 1HFY2025 earnings, its engineering order book had dipped to as low as $157 million as of September 2024.

Since then, Boustead has won a contract worth RM300 million ($91.1 million) to build a four-storey data centre and adjacent facilities. It also won a contract for an integrated pharmaceutical manufacturing and R&D facility at Tuas.

Separately, Boustead is transferring its fund and property-management businesses to Unified Industrial to form a pan-Asian logistics real estate development, investment, and fund management platform, with Boustead holding a 24.1% stake.

“The transaction is expected to free up substantial capital that would otherwise be committed to funding future development projects in Singapore and Vietnam, which the company can potentially allocate towards higher-yielding opportunities,” says Lim.

“At the same time, it will allow Boustead to diversify into Japan, China, and potentially other growth markets down the line,” she adds.

For more stories about where money flows, click here for Capital Section

On a pro forma basis, if this deal had taken place on April 1, 2023, Boustead’s earnings per share in FY2024 would have been 25.4% higher at 16.8 cents.

“We continue to look favourably upon Boustead’s long-term growth profile as its businesses provide exposure to multiple secular trends,” says Lim.

That said, she warns that broader macroeconomic growth concerns could weigh on investment sentiment.

She is leaving her forecasts unchanged for now, ahead of Boustead’s FY2025 earnings announcement, likely later this month. — The Edge Singapore

Mapletree Logistics Trust
Price target:
DBS Group Research ‘buy’ $1.55

US-China trade truce a ‘tactical opportunity’ to re-enter

According to DBS, S-REIT MLT has been impacted in recent times due to investors’ risk-off positioning given its warehouse exposure in Asean.

Given the muted outlook, analysts covering this counter have trimmed their distribution per unit forecasts by between 8% and 13% for FY2026 to FY2027, as MLT moves its distribution to one that is not boosted by divestment gains.

In the wake of the recent selloff to as low as $1.08, MLT is now trading at a yield of around 6.6% for FY2026–FY2027.

This implies a spread against the 10-year Singapore bonds of north of 4.1% — the highest level since 2018, apart from during the pandemic.

DBS calls this counter an “undervalued play” that is also one of Singapore’s “most liquid proxy”.

“We anticipate the macro tailwinds to be a near-term support for MLT in the interim and a compression of the yield spread towards historical mean levels, implying an upside north of 15%–20%,” says DBS. — The Edge Singapore

Manulife US REIT
Price target:
DBS Group Research ‘hold’ 10 US cents

Divestment of Atlanta property

DBS Group Research has maintained its “hold” call and target price of 10 US cents (13.05 cents) for Manulife US REIT (MUST) after the sale of yet another property puts it within “touching distance” of its divestment goal, as it plods along its restructuring path.

MUST on May 11 announced the sale of its Atlanta property called Peachtree for US$133.8 million ($174.2 million).

DBS estimates that, along with previous divestments, MUST is on track to repay a total of US$290 million since last November, bringing its total debt repayment to around 78% of total debts due in 2026 and 82% of the target required by the REIT to achieve by this coming June.

DBS notes that Peachtree is considered one of the stronger assets within MUST’s portfolio and the selling price will be at a discount of 19% off its most recent valuation of US$164 million.

The selling price represents an estimated exit cap rate of around 9.1% and a unit price of US$238 psf, which will place it in the historical transaction ranges in the past two years.

Upon completion of the sale, MUST’s financial metrics will improve; its closely watched gearing will improve to 57.7%, down from 60.8%.

MUST units were trading at around 6 US cents, equivalent to 0.2 times P/B and thus offering a “trading opportunity”.

However, “a clearer path towards recovery will be needed and reinstatement of distributions will support a longer-term revival in share price”, says DBS. — The Edge Singapore

Frasers Logistics Commercial Trust
Price target:
JP Morgan “underweight” 80 cents

DPU disappointment and challenging outlook

Frasers Logistics and Commercial Trust’s (FLCT) distributions per unit (DPU) in 1HFY2025 for the six months to March 31 declined by 13.8% y-o-y to 3 cents. Revenue and adjusted net property income (NPI) rose to $232.3 million and $161.3 million in 1HFY2025, respectively, up 7.5% y-o-y and 1.6% y-o-y.

Despite full contributions from Ellesmere Port, the acquisition of interests in four German logistics properties in March 2024, the Maastricht Property in the Netherlands and from the acquisition of 2 Tuas South Link 1 in November 2024, these revenue increases were offset by higher vacancies in ATP and 357 Collins Street, higher non-recoverable land taxes in Australia and lower average exchange rates (of AUD and EUR against the SGD) in 1HFY2025 compared to HFY2024.

FLCT’s aggregate leverage rose but remained healthy at 36.1%, with a weighted average debt maturity of 2.3 years and an interest coverage ratio of 4.5 times. With 69.7% of borrowings at fixed rates, FLCT’s cost of borrowings was 3.0% per annum on a trailing 12-month basis.

Finance costs were higher mainly due to higher interest rates and additional borrowings for developments and acquisitions. Distributable income for 1HFY2025 fell 13.5% y-o-y to $113.0 million due to higher finance costs, higher tax expense and 56.9% of 1HFY2025 management fees paid in cash.

JP Morgan points out that since November 2024, when FLCT announced its FY2024 results, FLCT’s unit price has fallen 7.5%, underperforming the S-REIT Index, which gained 2.2%. It attributed this to a 10%-12% cut in FLCT’s consensus DPU for FY2025 and FY2026.

“We believe FLCT will continue to disappoint, as we project FY2025 and FY2026 DPU to fall 16% and 4% y-o-y. While headwinds from the exit of Google at ATP and higher borrowing costs have been well known since last year, the AUD has depreciated further, margins have missed expectations, commercial portfolio occupancy has slipped with upcoming vacancies and the amount of capital top-ups is falling faster,” say JP Morgan analysts Mervin Song and Terence Khi in a report dated May 8.

“We expect a 10% p.a. decline in DPU over the next two years as FLCT faces interest rate headwinds, given that management estimates the cost of debt to rise to mid-3% in 2HFY2025 and to be marginally higher in FY2026 versus 3% in 2QFY2025,” JP Morgan says.

In addition, JP Morgan estimates that FLCT is facing vacancies of around 2% of its gross rental income, the potential sale of 357 Collins Street, whose occupancy has dropped to 63.9% compared to more than 80% in FY2024, the depreciation of the AUD, and continued vacancy at ATP. — The Edge Singapore

Hutchison Port Holdings Trust
Price target:
DBS Group Research ‘buy’ 18 US cents

Ninety-day trade truce a ‘meaningful’ catalyst

Instead of a previous expectation of a 17% y-o-y drop in cargo volume in 2QFY2025, DBS is now projecting a “mild” decline.

The US will now charge a 30% rate on imports from China, down from 145%, while China will levy just 10%, instead of 125%.

HPHT owns a network of container ports, including Yantian in Shenzhen.

DBS, citing container liners, says that outbound container volumes to the US declined by around 30% in April after US President Donald Trump announced the universal “reciprocal” tariffs.

“With the rate now reduced to a more manageable 30% - a level considered more tolerable by both shippers and end-consumers — we expect China-US cargo volumes to rebound from mid-May onward,” says DBS.

In a more optimistic scenario, accelerated front-loading during the 90-day tariff reduction window could even lead to a modest y-o-y increase in throughput for the quarter.

“Additionally, the easing of trade tensions coincides with the lead-up to the summer peak shipping season of between July and August, potentially providing further support to volume recovery,” adds DBS.

According to DBS, US-related cargo accounts for 40%–50% of Yantian’s total throughput.

Citing its analysis, a 1% y-o-y increase in Yantian’s throughput in FY2025 could boost HPHT’s earnings by HK$18 million ($3.01 million).

Pending further agreements between the US and China, DBS is keeping its “buy” call and 18 US cents target price, noting the “attractive” FY2025 dividend yield of 10%. — The Edge Singapore

Riverstone Holdings
Price targets:
RHB Bank Singapore ‘buy’ $1.08
CGS International ‘hold’ 84 cents
UOB Kay Hian ‘hold’ 82 cents

Downgrades on competitive pressure

However, having considered less favourable currency movements and lower selling prices, RHB has trimmed its target price from $1.18 to $1.08.

In 1QFY2025, Riverstone reported a 1% y-o-y increase in revenue, but earnings dropped by 19% y-o-y due to higher material costs and an unfavourable product sales mix, which weighed down margins.

The company plans to pay an interim dividend of RM0.03 ($0.091), representing a payout ratio of 79% and an annualised yield of 4% based on May 7’s closing price of 94 cents.

RHB is optimistic that Riverstone, whose gloves are used in clean rooms among others, will benefit from the recovery in global semiconductor sales this year, which is expected to grow by 11.2%.

According to RHB, the semiconductor industry’s pick-up is primarily underpinned by demand for logic integrated circuits and a strong recovery in memory space, thanks to the boom in artificial intelligence or artificial intelligence-related servers and equipment.

Ahead of the possible implementation of tariffs by the US, other Malaysian glove makers are seeing the front-loading of orders.

However, this is less so for Riverstone given how it is more focused on the cleanroom users, which fetches better margins, says RHB.

Nonetheless, having considered unfavourable forex and lower average selling prices, RHB has reduced its FY2025 and FY2026 earnings by 13% each. Having applied the same 20 times FY2025 earnings valuation, the new target price is $1.08 from $1.18.

“We continue to like the group for its unique exposure in the cleanroom segment, above-industry margins profile, and consistent dividend payouts,” says RHB.

Analysts from UOB Kay Hian and CGS International are not as optimistic, as both houses downgraded their respective calls on the stock.

William Tng of CGSI foresees greater competition for market share, which will exert pressure on margins as glove makers try to absorb higher material costs and bear with unfavourable currency movements.

Tng estimates that Riverstone’s FY2025 earnings might drop by 25% y-o-y before recovering 9% in FY2026.

He is cheered by how Riverstone’s dividend is set to remain relatively generous, but has downgraded his call from “add” to “hold”, with a new target price of 84 cents from $1.10.

For him, upside risks would include stronger-than-expected recovery in demand and better sales of cleanroom gloves on the back of a recovery in the electronics sector.

On the other hand, downside risks include weaker-than-expected gross margins due to the change in product mix and a stronger ringgit against the US dollar, as well as more intense competition in the Asia and Europe markets, as higher US tariffs would likely result in a diversion of gloves output by Chinese suppliers to these markets.

In their May 9 note, Heidi Mo and John Cheong of UOB Kay Hian point out that a gas shortage hampered Riverstone’s production increase. As a result, planned production using new lines will only start in July.

Like Tng, they expect Riverstone to maintain its dividend payout ratio due to its strong cash balance of RM760 million, equivalent to 18% of its market cap.

Nonetheless, they have also reduced their earnings projection by 11% for the current FY2025 and by 14% for FY2027.

“While volume growth is expected to continue, it will likely be more subdued due to ongoing gas supply constraints delaying the ramp-up of new production lines,” the analysts state.

In addition, they have reduced their earnings multiple from 20 times to 18 times, given near-term headwinds, deriving their new target price of 82 cents from $1.16.

“Prolonged uncertainty surrounding global trade and monetary policy is weighing on the US dollar and, in turn, impacting Riverstone’s earnings, while elevated raw material costs are expected to continue dampening margins,” state Mo and Cheong. — The Edge Singapore

ISOTeam
Price target:
KGI Securities ‘outperform’ 10 cents

Improving earnings, better efficiency

Alyssa Tee of KGI Securities has initiated coverage on ISOTeam with an “outperform” call, betting on its strong earnings recovery led by margin expansion.

”ISOTeam is well-positioned to capitalise on Singapore’s sustained public sector upgrading and green initiatives,” says Tee in her May 8 note, indicating a target price of 10 cents.

In 1HFY2025 ended December 2024, ISOTeam reported revenues of $65.4 million, up just 4.2% y-o-y. However, earnings rose 36.5% y-o-y to $1.9 million due to margin expansion.

As of February, the company’s outstanding order book was $188.7 million, providing earnings visibility through FY2029.

“The group is well-positioned to capture recurring demand from upgrading, sustainability retrofits and infrastructure enhancement projects,” says Tee.

According to Tee, ISOTeam is using technology well to improve its operations. Specifically, it is deploying facade cleaning and painting drones, which will help improve productivity.

Tee likes ISOTeam too for its attractive dividend prospects. The company has guided to pay at least 30% of its earnings for the current FY2025, which, to her, is an indication of the company’s confidence in its earnings recovery and robust project pipeline.

“ISOTeam’s dominant position in public sector upgrading, which contributes over 80% of revenue, coupled with expanding exposure to green projects, underpins resilient cash flows and long-term growth.

“With a healthy balance sheet, robust project pipeline, and increasing productivity from digitalisation, we expect steady earnings growth and margin expansion over the medium term,” says Tee. — The Edge Singapore

Zixin Group Holdings
Price target:
CGS International ‘add’ 87 cents

Newer products, bigger orders, better margins

With “substantial orders” for these new products on hand and improvement in its margins, Tang has given Zixin an “outperform” rating and a target price of 6 cents.

In his May 9 note, Tang says that Zixin, now based in China’s Fujian province, has also expanded into Hainan, with access to a “significantly larger” land area to use.

Although currently in the initial stages, the group anticipates realising profits from this expansion starting in FY2027.

“This strategic move marks Zixin’s first replication of its model outside Fujian, demonstrating its growth ambitions in the agricultural sector,” he says.

Zixin, having developed a new range of products, has begun to deliver “substantial” orders received in February, supporting the company’s production volume.

In FY2024, Zixin was able to fetch a net profit margin of 4.2%, its highest in over five years.

“These improving margins showcased the initial results of Zixin Group’s integrated industrial value chain, which includes the supporting industry of cold storage warehousing services, enabling the company to recover from the post-Covid crisis and return to profitability,” says Tang.

In the more recent 1HFY2025, Zixin reported earnings of RMB7.7 million ($2.33 million), versus a loss of RMB3.4 million in 1HFY2024. Revenue in the same period was up 33.1% y-o-y to RMB156.7 million.

“The company continues to make strong progress on its integrated circular economy industrial value chain across business operations, driving significant and organic growth in financial performance,” says Tang.

As Tang sees it, Zixin Group’s strong cash position and business model also position the company well to capture economies of scale and the benefits of the entire supply chain, further driving growth.

“The company’s improving margins also highlight the company’s growth trajectory,” he adds. — The Edge Singapore