Starhill Global REIT (SGREIT) is “underappreciated” despite delivering “steady operational performance over the last five years” in a challenging environment, says RHB Bank Singapore analyst Vijay Natarajan.
In an April 1 note, Natarajan adds that the REIT remains “well-poised” to navigate an evolving retail landscape with a balanced mix of master leases, an actively managed portfolio and strong sponsor support.
“Management has been prudent on capital management, keeping gearing below 40% and refraining from acquisitions. The stock is trading at attractive levels at 30% below book value while offering stable dividend yields of [more than] 7%,” he writes.
Natarajan adds that SGREIT’s gearing remains “comfortable” at 36%, with an 83% debt hedge. Interest costs will likely peak at the current 3.7% level. For these reasons, Natarajan is keeping his “buy” call and target price of 57 cents for SGREIT. Based on RHB’s proprietary methodology, this represents a 14% upside and a 2% ESG premium.
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SGREIT invests in retail and office buildings in Singapore, Australia, Japan and China.
Natarajan notes that the upside from SGREIT’s master lease extensions will kick in from FY2026. Katagreen (a wholly-owned subsidiary of its sponsor, YTL Corp) has exercised a call option to extend master leases at its Lot 10 asset in Kuala Lumpur for another three-year term starting in July.
The total rental income for the new term will be 6% higher than the existing figure. This follows the Toshin master lease extension for an initial period of 12 years starting June. Toshin is the largest tenant, accounting for 23% of income in 1HFY2025.
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The annual base rent for the first three years will be 1% above the existing base rental rate and the prevailing annual rental value at the start of the lease.
Failing this, the rate will be based on average market rental values as determined by three valuers but will not exceed 125% of the first option.
In addition, a profit-sharing agreement will be entered into if revenue and profit margin thresholds are met, thereby providing additional upside, says Natarajan.
Overall, SGREIT’s portfolio committed occupancy rate remains high at a stable 97.7%, with near-full occupancy for the Singapore assets. This has been achieved by expanding its array of renowned featured fashion brands such as Burberry, Tod’s and Risis Atelier.
Management expects rent reversion to be in healthy double digits for retail and office lease renewals, notes Natarajan.
SGREIT divested some 7,653 sq ft of net lettable area (NLA) on Wisma Atria’s 12th level for $16.1 million, or $2,100 psf, in December 2024.
Wisma Atria’s retail business has been benefitting from the ongoing asset enhancements. SGREIT will embark on more asset enhancement initiatives at Wisma Atria, which include repurposing the Level 7 car park for office use (some 3,250 sq ft) with an estimated return on investment of more than 8%. Management will also enhance drop-off points and tenant shopfronts.
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“We expect these steps to boost the overall valuation of the asset,” says Natarajan.
SGREIT posted its results for 1HFY2024/2025 ended Dec 31, 2024 on Jan 23. For the half-year period, the REIT’s gross revenue increased by 1.7% y-o-y to $96.3 million, while net property income (NPI) rose by 1.6% y-o-y to $75.6 million. — Jovi Ho
Geo Energy Resources
Price target:
PhillipCapital ‘buy’ 47 cents
Higher production plus new revenue stream
PhillipCapital’s Paul Chew has initiated coverage on Geo Energy Resources with a “buy” call and 47 cents price target on expectations that the coal miner is set to enjoy stronger earnings from higher production levels and a new revenue stream.
Besides its own coal mining business, Geo Energy is building a 92km road, which will be leased to two other nearby miners. The road will allow the miners to move their production to a jetty at the end of the road, where it will be exported. Geo Energy has contracted China Communications Construction Company to build the road and jetty in Indonesia for US$150 million ($201 million).
Under the contract, Geo will pay US$21 million first, with the remainder to be paid progressively over the next two years.
Upon completion, the road will help Geo Energy increase the output of its mine by 25 million metric tonnes in 1HFY2026 and 50 million metric tonnes in 2028.
Also, Geo Energy will generate revenue by leasing out 25 million metric tonnes of hauling capacity to other coal miners at a rate of US$10 per metric tonne, which could eventually exceed US$200 million per annum, estimates Chew.
Meanwhile, emerging markets such as China, India and other parts of Southeast Asia are supporting worldwide coal demand at a CAGR of 2%.
Chew values Geo Energy using a discounted cash flow method, with a 70% discount on the assets assumed for now as the road is still under construction. — The Edge Singapore
ComfortDelGro
Price target:
DBS Group Research ‘buy’ $1.80
Overseas contribution seen to rev up
DBS Group Research remains upbeat on ComfortDelGro (CDG) on expectations that it enjoys a growing contribution from its overseas businesses. Despite overseas acquisitions sending its balance sheet into net debt, CDG has kept its FY2024 dividend payout ratio at 80%.
DBS notes that CDG’s overseas businesses contributed 35% of its total operating profit in FY2024, up from 26% in FY2023.
Recent acquisitions such as A2B, CMAC and Addison Lee, new addition bus contracts in the UK and contract renewal at better margins for other UK buses are expected to drive growth in FY2025.
DBS says overseas growth will mitigate the softer numbers expected from its taxi and point-to-point business here in Singapore. According to DBS, CDG is focused on charting its long-term profit path by focusing on accretive M&A than growing for growth’s sake.
News on April 2 that Grab Holdings will become the sixth taxi operator in Singapore is also seen as positive for the industry and a sign of improving economics. DBS estimates that the shrinking but still sizeable street-hail market is an annualised fare opportunity of $416 million at an assumed average fare of $16 per trip. Grab may aim to grow the overall driver pool by encouraging its existing private hire drivers to convert to taxi drivers and potentially earn more fare from street-hailing. “With increased awareness of the higher income opportunity, the broader industry, including ComfortDelGro, could benefit from a return to fleet expansion,” says DBS.
“The counter offers growth, yield and value on the back of our projected 14% y-o-y increase in net profit, some 6% yield at 80% payout ratio, trading at around 13 times P/E, 1.2 times P/B with ROE projected to cross 9% in FY2025,” says DBS in its March 28 note, where it kept its “buy” call and $1.80 target price. — The Edge Singapore
China Sunsine
Price target:
UOB Kay Hian ‘buy’ 63 cents
Earnings growth ahead
UOB Kay Hian analysts Heidi Mo and John Cheong are maintaining their “buy” call on China Sunsine Chemical and raising their target price to 63 cents from 58 cents.
Last year, the group achieved a record sales volume of 214,094 tonnes, driven by an 11% y-o-y increase in international sales volume due to robust demand from Southeast Asian-based tyre manufacturers.
Domestic sales volumes, however, saw a marginal 1% y-o-y decline, which Mo and Cheong expect to improve as China’s target stimulus measures are to aid consumption recovery.
In 2024, China’s total automobile sales were up 5% y-o-y to 31.4 million units.
In their March 26 report, Mo and Cheng say China is the world’s largest tyre producer, accounting for over 40% of global output. This suggests plenty of demand for China Sunsine, both domestic and international.
More importantly, China’s rubber tyre exports grew 3.3% y-o-y to 1.38 million tonnes from January to February, according to Tireworld, a tyre industry data service provider in China.
They add that increased adoption of electric vehicles could boost new vehicle sales as well.
Meanwhile, according to Sublime China Information (SCI), average selling prices (ASP) for rubber accelerators between January and March were slightly lower than in 4QFY2024, while average aniline prices dropped by around 6%.
“We expect gross margin to remain stable y-o-y at around 25% in 1HFY2025, supported by cost savings from the ramp-up of new Mercaptobenzothiazole (MBT) production in 4QFY2024, which may partially offset the intensified market competition,” write the analysts.
In FY2024, China Sunsine reported 14% y-o-y higher earnings at RMB424 million ($75.6 million), beating the UOBKH analysts’ and consensus forecasts by 12% and 14%, respectively.
Mo and Cheong write: “The beat was due to lower-than-expected R&D expenses, which fell 28% y-o-y or RMB33 million due to the completion of R&D activities and foreign currency gains of RMB28 million.”
Similarly, group revenue of RMB3.5 billion, driven by record-high sales volume and offset by a 2% y-o-y decline in ASPs, matched the analysts’ forecast.
As a result, the group’s gross margin expanded 1.3 percentage points (ppts) y-o-y to 24.2%.
With a healthy cash position of RMB2.07 billion, the group has announced an attractive dividend yield of 6% for FY2024, translating to RMB2.18 a share or 77% of its market cap.
“This provides ample room for Sunsine to potentially raise its dividend and continue to perform share buybacks,” write Mo and Cheong.
Management has highlighted that China Sunsine maintained its position as the world’s largest accelerator producer, with a stable market share of 23% in 2024. In China, it also upheld its leadership with a market share of 35%.
To this end, the analysts note that with a rubber accelerator capacity of 117,000 tonnes, the group is well-positioned to expand its customer base of over 1,000 clients across more than 40 countries, including more than 75% of the top 75 global tyre makers such as Bridgestone, Goodyear and Michelin.
Mo and Cheong also see that phase two of the insoluble sulphur project, about 30,000 tonnes, is set to begin trial runs in the 1HFY2025, which will meet rising market demand.
They add: “Additionally, phase two of the 60,000-tonne MBT project is in the pipeline. As MBT is a key intermediary product that produces about 80% of rubber accelerators, this will enhance cost savings and reduce reliance on external suppliers.”
With this, Mo and Cheong have raised their FY2025 and FY2026 earnings estimates by 9% and 6%, respectively, after factoring in better-than-expected gross margins from the MBT capacity expansion. They note that this “improves self-sufficiency” as MBT is the main feedstock for most types of rubber accelerators.
Net margins for Chin Sunshine have also been raised from 1 ppt to 2 ppts on lower R&D expenses.
They conclude: “The stock trades at an attractive valuation of 1.4 times ex-cash FY2025 price-to-earnings ratio (P/E).” — Douglas Toh
Centurion Corp
Price target:
Maybank Securities ‘buy’ $1.45
‘In the right space’
Maybank Securities analysts Eric Ong and Jarick Seet have initiated coverage on worker and student dormitory operator Centurion Corporation at a target price of $1.45.
They note that despite the share price’s outperformance, the current valuation of the stock at around 10 times forward price-to-earnings ratio (P/E) is “not too excessive”, thanks to recurring earnings visibility from robust construction-driven demand in Singapore and a clear pipeline of capacity expansion.
Ong and Seet write in their Mar 28 report: “In 2Q2025, about 9,000 dormitory beds will be taken out of local supply as the lease to operate one of the larger dorms by its competitor will not be renewed.”
Centurion’s management also anticipates a further supply squeeze by 2027, when dorms must meet upgraded interim standards under the Ministry of Manpower’s Dormitory Transition Scheme (DTS).
The analysts see that the group’s Westlite Toh Guan and Westlite Mandai dorms can serve as “swing sites” during such transition shifts.
Meanwhile, the group plans to develop some 7,000 beds in Malaysia, including Nusajaya, Iskandar and Johor. Ong and Seet note that they could benefit from the setting up the Johor-Singapore Special Economic Zone (JS-SEZ).
Centurion’s student accommodation portfolio includes plans for expansion in Australia and the UK.
“Universities in the UK are growing their international student numbers, which should spur demand. In Australia, there is also an ongoing shortage of beds and the group is looking to further increase its bed count in Melbourne and Sydney,” write Ong and Seet.
The group has also established two joint ventures (JVs) for built-to-rent (BTR) projects in Xiamen, China. These JVs follow a property development model where buildings are specifically constructed or retrofitted for long-term rental accommodation purposes.
Overall, the analysts see that the demand-supply dynamics in the specialised accommodation sector continue to support positive rental rate revisions for Centurion. The group is also seeking scalable growth via JVs and an asset-light strategy, as well as selectively growing its portfolio through accretive mergers and acquisitions (M&A) in existing and new markets.
They conclude: “Additionally, the group is exploring a transaction involving the establishment of a REIT and also considering a dividend in specie of some of the units in the proposed trust to reward shareholders.”
Upside factors include better-than-expected financial occupancy, rental rate reversion for the group’s accommodation assets, potential capital recycling exercises to generate higher returns and the aforementioned portfolio expansion via asset-light strategy in existing and new markets.
Conversely, downsides include an oversupply of beds, which results in higher vacancy rates, lower-than-expected margins from intense competition and, finally, a deterioration in the macroeconomic environment. — Douglas Toh
CNMC Goldmine Holdings
Price target:
PhillipCapital ‘buy’ 49 cents
Record gold prices plus higher production volume
PhillipCapital’s Paul Chew and Liu Miaomiao have initiated coverage on CNMC Goldmine Holdings with a “buy” call and a target price of 49 cents.
In their April 1 note, the analysts believe that the Malaysia-based gold miner will likely see earnings grow by 46% y-o-y to US$17.9 million ($24.05 million) for the current FY2025 ending Dec 31, thanks to higher production volume and gold prices.
“Gold prices have remained at multi-year highs since the beginning of 2024, and the market remains bullish on the 2025 outlook amid heightened geopolitical tensions and aggressive central banks purchase,” state Chew and Liu.
“CNMC stands to be a key beneficiary, selling gold at spot prices. We expect the average selling price to increase by at least 18% y-o-y to US$2,900,” they add.
In addition, CNMC is seen as a leveraged play on rising gold prices as it ramps up production capacity this year. They estimate the company to generate $34 million per year in free cash flow over the next ten years, implying a free cash flow yield of 24%.
Assuming the dividend payout ratio is kept at at least 40%, this translates into a yield of 5.6%. The target price of 49 cents is based on 10.3 times FY2025 earnings. — The Edge Singapore
Thai Beverage
Price target:
CGS International ‘add’ 58 cents
Looser rules to bring in more tourists
CGS International has kept its “add” call on Thai Beverage , along with a target price of 58 cents, on expectations that strong tourist arrivals will help drive sales volumes this year.
In addition, analysts Meghana Kande and Lim Siew Khee state in their March 21 note that recent regulatory changes in Thailand, extending the hours in which alcohol can be sold, are another positive.
With stronger tourist numbers for ThaiBev’s key markets of Thailand and Vietnam, the analysts believe the company can enjoy 7% growth in beer sales volume in the current FY2025 ending September.
To target a 13% growth in tourism this year, Thailand is moving forward with eased restrictions limiting the timing of the sale of alcohol, plus promotional activities.
“Thailand is also exploring the possibility of relaxing the current ban on alcohol sales during Buddhist holidays by allowing limited sales in specific tourist hotspots,” add Kande and Lim.
They expect ThaiBev, whose Chang beer holds the second-largest market share in Thailand, to continue with aggressive promotions through this current financial year.
“ThaiBev has a strong distribution network, supported by its close relationships with mom-and-pop shops and targeted marketing campaigns to drive sales growth.
“We think aggressive promotional spend to gain market share ahead of easing alcohol restrictions could keep ThaiBev’s ebitda margins broadly flat in FY2025 at 18%,” state Kande and Lim, whose target price of 58 cents is based on a sum-of-the-parts valuation.
Possible re-rating catalysts include stronger margins on lower-than-expected input costs and cost controls, as well as higher volume growth from fewer restrictions on alcohol sales. On the other hand, downside risks include macroeconomic weakness impacting sales volumes and lower margins amid higher costs. — The Edge Singapore
ISOTeam
Price target:
Maybank Securities ‘buy’ 10.4 cents
CEO ups stake to inspire confidence
Jarick Seet of Maybank Securities, citing ISOTeam’s CEO Anthony Koh’s open-market buying of shares and a busier construction outlook, has maintained his “buy” call on the stock and a higher target price of 10.4 cents from 9 cents.
“With an ongoing construction upcycle last seen during the post-Global Financial Crisis era, coupled with the strong order book as well as the CEO buying the shares despite outperformance in its share price, we believe the outlook is brighter for ISOTeam,” says Seet in his March 24 note.
He observes that ISOTeam’s share price has already gained 26% since the start of the year and is up 133% y-o-y, but even so, CEO Koh recently paid 7.55 cents each to buy 3 million shares.
“We believe the commitment of the CEO’s funds is the best validation of ISOTeam’s outlook,” says Seet.
ISOTeam, best known as a painting contractor, is poised to start deploying drones to do this job. Seet says that being the only contractor in town to use this method, ISOTeam can cut costs by 30% to 40%.
Also, the strong pipeline of building projects will help ISOTeam build a bigger order book that includes works involving the public sector.
“We believe ISOTeam will be a key beneficiary of the upcoming Singapore election and the ongoing construction boom,” says Seet.
“We think sector margins could potentially be higher than we previously expected due to the increase in demand, coupled with ISOTeam’s high operating leverage,” says Seet.
He has revised his FY2026 ending June 2026 earnings estimate by 8% and FY2027’s by 11.5%, leading to his higher target price of 10.4 cents, which is pegged to the same nine times blended FY2025 and FY2026 earnings. — The Edge Singapore
Keppel DC REIT
Price target:
UOB Kay Hian ‘buy’ $2.55
Limited near-term new capacity
UOB Kay Hian’s Jonathan Koh has kept his “buy” call on Keppel DC REIT, given the recent “upsurge” in positive rental reversion for colocation data centre leases in Singapore should sustain till next year.
Also, two of Keppel DC REIT’s newly acquired data centres, SGP7 and SGP8, will start contributing in 1HFY2025 ending December, adding 8.1% to its distribution per unit over 1HFY2024, on a pro forma basis, says Koh, who has raised its target price to $2.55 from $2.53.
The REIT is actively reshaping its portfolio. In February, it announced the sale of a data centre in Frankfurt for $70.6 million, which is a 28% premium over the property’s valuation.
Koh notes that this data centre had the go-ahead to increase its capacity, but Keppel DC REIT had more ambitious plans to redevelop it into something bigger. “The decision to divest was in line with Keppel DC REIT’s renewed focus on hyperscale data centres,” he says.
Meanwhile, the REIT’s manager is looking for acquisitions as part of its efforts to rebalance its portfolio and capitalise on structural trends, such as generative artificial intelligence (AI).
Koh says the REIT is exploring Japan, South Korea and Europe. The REIT is keen to tap its sponsor Keppel’s pipeline, but a new data centre, SGP9, has yet to begin construction.
In China, where Keppel DC REIT is also present, demand for data centres is seen to grow, thanks to the growing popularity of AI applications.
Koh says that the REIT is working with its tenant in China, Bluesea Development, to “execute the recovery roadmap” for Guangdong DC1 and DC2, both of which are seeing occupancy rates of just 30% now.
Keppel DC REIT has received more enquiries from prospective tenants. The analyst says management expects the actual signing of new leases next year.
Citing the REIT’s manager, Koh says the valuation for the China data centres will remain stable.
He has trimmed his forecast for the REIT’s DPU for the coming FY2026 by 4% but has raised the subsequent FY2027 estimate by 1%. — The Edge Singapore
