Citi Research analyst Arthur Pineda has maintained his “neutral” call on Venture Corporationbut with a lowered target price of $11.80 from $13.80 to factor in a potential downturn in demand for Venture due to tariff uncertainty.
“Venture’s production capacities primarily lie in Malaysia and Singapore, which account for over 85% of its capacities. While extra reciprocal US tariffs have been put on hold, ongoing uncertainty on future steps is likely to weigh on US customer orders,” states the analyst in his May 5 report.
With this, Pineda factors in a 10% to 20% potential reduction of revenue from US customers, which in turn likely applies to the 10% to 20% of revenue stemming from the US.
“Venture may try to offshore some of the production to facilities in Singapore, which account for a quarter of group production capacities, in a move to reduce tariff risks,” he says.
Although a smaller portion could be onshored to the US, this will likely come at the expense of margins due to higher production costs and capital expenditure (capex), he warns.
Pineda has trimmed his revenue forecast for Venture by 2 percentage points (ppts) to 4 ppts, reducing his earnings estimates by 9% to 16% for FY2025 to FY2027.
“The situation remains highly fluid with the resolution of trade deals as possible.
See also: New customer orders for UMS warms analysts’ sentiments
“Nonetheless, some tariffs will likely apply, which, in turn, could deflate revenue momentum for the group. We expect the company to strike a cautious tone when it releases results on May 14,” says Pineda.
Meanwhile, Pineda also raises the possibility that now could be the right time for shareholders of Venture stock to sell. He asks: “Why not sell?”, noting that since the tariffs were announced, investors have had little time to assess risk.
With the stock’s share price at an eight-year low, the analyst sees any downside risks as being tempered given Venture’s dividend yield of 6.8%, which can be “well and sustainably supported” given Venture’s net cash balance sheet position, Pineda reasons.
“In addition, the company’s share buyback program should provide further support. We think investor interest, however, is unlikely to revive until there is clarity on how much tariffs will be charged and how this will impact demand and margins,” he says.
Downside risks include the destruction of demand if customers undertake mergers and acquisitions (M&A), labour shortages as a result of original equipment manufacturers (OEMs) trying to find new supply chain alternatives, an unexpected slowdown in economies that could hurt technology spending and finally, material downside demand for Venture’s products owing to tariff risks.
Conversely, Pineda sees that the stock could outperform his target price, with growth potentially returning if the abovementioned factors move in favour of the company or if tariff risks resolve quickly or are eliminated. — Douglas Toh
Aztech Global
Price target:
Maybank Securities ‘hold’ 45 cents
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Bearish outlook
As with other tech players whose production facilities are in Southeast Asia and customers are based in the US, Aztech Globallooks to be affected by Trump’s tariffs.
With this, Maybank Securities analyst Jarick Seet kept his “hold” call on the stock at a lowered target price of 45 cents from 56 cents.
In 1QFY2025 ended March 31, Aztech reported revenue of $42 million and earnings of $12.5 million, a fall of 67% y-o-y and 91% y-o-y, respectively.
Seets believes that earnings uplift will only come in 2HFY2025 as its new automated production line in Malaysia, which is on track to be commissioned, starts running with five new customers from the consumer, health-tech and industrial segments.
Meanwhile, tariffs will reduce US consumer demand and orders from its key customer should remain weak. “Even with the ramp-up of its five new customers, it will not be able to replace orders lost from its key customer in the short term,” says Seet.
Aztech has won over investors thus far for its generous dividend, as it returns excess cash to shareholders.
For FY2024, it is paying an ordinary dividend of 8 cents per share plus a special dividend of 7 cents, amounting to $311.3 million, which translates to a payout ratio of 164%.
Seet warns that despite the strong cash generation capabilities, Aztech is unlikely to sustain dividends at this level because of the tariffs and might reduce the payout.
“Previously, we expected the high dividends to be attractive despite the risk,” he says.
“But with the tariffs causing a potentially fundamental change along with the downside risks we mentioned above, we now believe investors are better off not accumulating more while waiting for the tariff situation to stabilise,” he adds.
With this, Seet has cut his FY2025 and FY2026 earnings forecasts by 43.1% and 43%, respectively.
Of the listed tech players in Singapore, he prefers Frencken Groupfor the growth in its semiconductor segment.
Upside factors for the stock noted by Seet include a better-than-expected order momentum of existing products in the current Internet of Things (IoT) upcycle, new customer wins and better-than-expected margins from operating leverage.
Conversely, downsides include the commoditisation of consumer IoT products that lead to pricing erosion, a worsening in the components shortage situation and lastly, inventory correction due to over-exuberance of the supply chain in anticipating end-consumer demand. — Douglas Toh
Elite UK REIT
Price targets:
RHB Bank Singapore ‘buy’ 35 pence
PhillipCapital ‘buy’ 35 pence
‘Healthy’ 1QFY2025 DPU
RHB Bank Singapore analyst Vijay Natarajan is maintaining his “buy” call and GBP0.35 (60.87 cents) target price on Elite UK REIT after the REIT reported “healthy” distribution per unit (DPU) for 1QFY2025 ended March 31, 10% higher y-o-y.
This was aided by higher net property income on the back of positive rent reversions and lower vacancy costs, says Natarajan in a May 2 note. Elite UK REIT’s financing costs declined 10 basis points (bps) q-o-q and 40 bps y-o-y and are expected to further decline by between 10 bps and 30 bps in the current FY2025.
Tax expense, meanwhile, was 14% lower y-o-y due to higher interest deduction and higher capital allowance claims from sustainability enhancement works, says Natarajan.
With “no major earnings changes”, Natarajan expects a 6% DPU CAGR between FY2024 and FY2027 from lower borrowing and vacancy costs.
Elite UK REIT has applied to convert Lindsay House, Dundee, into a 168-bed purpose-built student accommodation (PBSA), with approvals expected by 2H2025.
The REIT expects to pump in GBP14 million to GBP15 million in capex to repurpose the vacant asset into a PBSA and expects a return on investment (ROI) in the teens.
Capex will potentially be funded via debt; the REIT is also exploring the possibility of bringing in equity partners by selling a stake.
The asset has been identified for repositioning due to its superior location advantages, flanked by two major universities and limited PBSA supply in the market, according to management.
Elite UK REIT also disposed of Crown Buildings, Caerphilly, at an 18% premium to valuation during the quarter, marking nine disposals since 2023 at a 14% premium.
It is in the process of disposing Victoria Road in Kirkcaldy and exploring the repositioning of Cambria House in Cardiff into a PBSA.
Management is committed to its plan to renew 25% to 30% of its anchor government tenant leases (99% of income) early this year and mitigate concentration risk.
Elite UK REIT has also secured 120 megavolt-amps (MVA) of power supply for the Peel Park, Blackpool site in February for a planned hyperscale and artificial intelligence-enabled capacity data centre.
The planning application has been submitted to local authorities and is in its final stages.
Natarajan believes Elite UK REIT is likely to monetise the land value by selling to a third party or hyperscale player at a good premium, considering the huge capex requirements for developing a data centre.
Such a sale could raise proceeds of above GBP20 million ($34.5 million), in his view, thereby reducing the gearing closer to its 40% target level.
Phillip Securities’ Liu Miaomiao, too, is staying “buy” on Elite UK REIT with an unchanged 35 pence target price, identical to RHB.
“We expect valuations to remain resilient, with a positive uplift in FY2025, supported by Elite’s active lease renewal negotiations with the Department of Work and Pensions.
“Additionally, Bank of England Governor Andrew Bailey signalled the potential for up to four 25 bps rate cuts in 2025, contingent on sustained inflation moderation, which provides further support,” writes Liu in a May 2 note.
Due to recent market volatility surrounding US tariffs, Liu does not expect Elite UK REIT to embark on any “near-term acquisition plans”. “As a result, gearing is expected to trend to below 40% following the successful divestment of Peel Park, [down from] 42.2% in 1QFY2025.” — Jovi Ho
Wee Hur
Price target:
PhillipCapital ‘buy’ 62 cents
Special dividend on the way
Phillip Securities analyst Yik Ban Chong is maintaining a “buy” on Wee Hur with an unchanged target price of 62 cents, or 55 cents ex-special dividend. This comes after shareholders approved resolutions to pay out total dividends of 7.8 cents per share, which includes special dividends from its Purpose Built Student Accommodation (PBSA) Fund I divestment. The dividends will be paid on May 23 and the ex-date is May 7.
Wee Hur was recently awarded a new $236.4 million build-to-order (BTO) project. The BTO project is expected to last till 4Q2029. Wee Hur has thus increased its construction order book value by some 90% to $499.7 million.
In turn, Yik has raised his FY2025 and FY2026 revenue forecasts by 9% and 26%, respectively.
Wee Hur is also developing new properties in Australia. Wee Hur has obtained a Development Application (DA) for a 683-bed PBSA property. Construction will start in 2H2025 and Fund III is shoule be set up for this asset by June.
Wee Hur also obtained DA for a 358-residential lot in Lowood, under its Australia property development segment. Yik expects the sale of Lowood’s residential lots to contribute to Wee Hur’s FY2026 revenue.
The weighted average cost of capital (WACC) for Wee Hur’s worker dormitory segment has risen to 13.4% from 9.7% as it is uncertain whether its Tuas View Dormitory’s lease will be extended after it ends in November 2026.
Yik has cut his FY2025 patmi forecast to $85.2 million from $113.5 million due to a $26 million expected y-o-y decline in share of profits from joint ventures from the sale of PBSA Fund I.
According to Yik, Wee Hur is trading at an “attractive” discount to book value of 26%, as it plans to sell its remaining PBSA stake valued at $232 million, or 49% of its market capitalisation. — Jovi Ho
CDL Hospitality Trusts
Price target:
CGS International ‘add’ 87 cents
Hospitality headwinds
CGS International Research analysts Lock Mun Yee and Li Jialin have slashed their target price on CDL Hospitality Trusts(CDLHT) by more than 18% to 87 cents, citing headwinds for both its Singapore and overseas assets.
That said, Lock and Li are maintaining their “add” call on CDLHT in a May 2 note.
CDLHT reported gross revenue of $63.4 million for 1QFY2025, 2.8% lower y-o-y, due to lower revenue seen across all of its markets except for the UK and Japan. Net property income (NPI) fell by 14.2% y-o-y to $30 million, with declines across CDLHT’s geographies except for Japan and the UK.
CDLHT’s Singapore portfolio saw its revenue per available room (RevPAR) fall 16% over 1QFY2025 ended March 31, led by lower occupancy and a falling average daily rate.
Singapore contributed some 60% of CDLHT’s NPI in 1QFY2025. CDLHT owns six hotels across the island, along with Claymore Connect, a retail mall adjoining Orchard Hotel.
CDLHT’s W Singapore began renovations in February, which is expected to be complete in end-2025. More broadly, CDLHT’s management noted that the net supply of Singapore hotels rose 6.3% since 2023.
These, coupled with a stronger Singapore dollar and normalisation in travel demand, were a drag on CDLHT’s Singapore occupancy and RevPAR. CDLHT’s management intends to secure more group bookings in place of transient travel demands.
Meanwhile, CDLHT’s overseas markets are also facing headwinds. Its sole New Zealand hotel, for example, saw RevPAR slip 3.5% y-o-y in 1QFY2025, while NPI declined 24% y-o-y.
Management sees a brighter outlook for the New Zealand portfolio in FY2026, with the opening of the New Zealand International Convention Centre.
CDLHT’s two hotels in Perth, Australia, saw a higher RevPAR of 1.7% y-o-y in 1QFY2025, but NPI plummeted 53% y-o-y. This was due to the impact of the final stages of room renovations and a temporary one-month closure of the bar at Ibis Perth, which affected F&B revenue and overall operating performance.
CDLHT also reported higher operating expenses, including higher utility costs and the absence of payroll tax credit received in the prior year, along with the depreciation of the Australian dollar.
Meanwhile, CDLHT’s two Maldives resorts continued to see a downturn in RevPAR (down 10% y-o-y) and NPI (down 26% y-o-y) in 1QFY2025 with greater competition.
Management is also cautious about the outlook of Pullman Hotel Munich and Hotel Cerretani Firenze, as both might be impacted by ongoing tariff hikes due to reliance on corporate demands and travellers from the US, respectively.
That said, CGSI notes “potential green shoots” in CDLHT’s UK and Japan portfolio. The UK hotel portfolio accounted for some 15% of CDLHT’s NPI in 1QFY2025. Its UK RevPAR rose 1% and NPI rose 27% y-o-y on the Hotel Indigo Exeter, acquired in November 2024.
CDLHT’s four UK hotels also improved efficiency, operations and lease terms.
Meanwhile, CDLHT’s Japan portfolio also saw positive growth in RevPAR (up 11.2% y-o-y) and NPI (up 5.3% y-o-y) in local currency.
CDLHT’s gearing was at 41.8% as of March 31, with the cost of debt down 10 basis points at 3.9%.
CDLHT has a “low” fixed rate borrowing of 34% and 28% of its borrowings are due for refinancing in 2HFY2025, notes CGSI. “Management sees room for downward adjustment in average cost of debt for FY2025, if current interest rate cuts expectation materialises.”— Jovi Ho
Sheng Siong Group
Price targets:
Citi Research ‘buy’ $2.05
DBS Group Research ‘buy’ $2
UOB Kay Hian ‘buy’ $1.97
CGS International ‘add’ $1.90
RHB Bank Singapore ‘buy’ $1.98
PhillipCapital ‘accumulate’ $1.89
Steady outlet expansion leads to raised target prices
Sheng Siong Group’s planned store openings for FY2025, which could lead to better earnings, are viewed positively by analysts such as Citi Research’s Gan Huan Wen, who is raising their respective target prices. “Sheng Siong’s six new stores in the pipeline will take full-year store additions to eight, much higher than previously guided minimum of three,” states Gan in his April 30 note.
Sheng Siong has won four of the six recent HDB tenders, with another two stores planned to open in retail malls Kinex and The Cathay. “We understand all but one of these stores were previously operated by a competitor. We are positive on this, given locations with former supermarket tenants generally have a quicker payback period,” says Gan, who has raised his target price from $1.90 to $2.05.
He also expects Macrovalue, the recent acquirer of Cold Storage and Giant, to give up unprofitable store locations, paving the way for Sheng Siong to open even more stores.
For the current 2QFY2025, Gan figures that even with higher staff costs, Sheng Shiong should still improve its gross margins thanks to a skew towards higher-margin perishables and more efficient procurement. However, 2QFY2025 earnings might soften q-o-q due to the absence of the Chinese New Year and Hari Raya festive sales boost and also higher staff costs needed to manage new stores.
UOB Kay Hian’s (UOBKH) Heidi Mo and John Cheong share a similar sentiment as they kept their “buy” call along with a higher target price of $1.97 from $1.92. They figure that with 50,000 build-to-order (BTO) flats slated for launch between 2025 and 2027, Sheng Siong is well-positioned to benefit from increased tendering opportunities for retail spaces. “We have raised our FY2025 store openings forecast from five to nine, along with an upward revision to our earnings forecast,” write Mo and Cheong.
Catalysts for the share price include higher-than-expected new store openings and same-store sales growth, as well as stronger demand arising from the inflationary environment and GST hike.
Similarly, PhillipCapital’s Paul Chew has maintained his “accumulate” call and raised his target price to $1.89 from $1.76. “We believe Sheng Siong is gaining share and scale as competitors turn more subscale. The capture of market share and new stores will offset the soft same-store sales by around 1%. Wage inflation remains the most significant cost challenge due to the tight labour market, especially for locals.”
DBS Group Research’s Chee Zheng Feng and Andy Sim have kept their “buy” call and upped their target price to $2.00 from $1.90. While they trimmed their EPS estimate for FY2025 by 1%, they have raised their FY2026 and FY2027 EPS forecast by 2% and 5%, respectively, with contributions from new stores. They have also raised their 1QFY2025 gross margin assumption upwards from 30.7% to 31.2% due to stronger economies of scale.
Meanwhile, CGS International’s Meghana Kande and Lim Siew Khee have kept their “add” call and target price of $1.90. They expect Sheng Siong to open a total of 10 new stores in the current FY2025. “While we think upfront staffing and rental expenses for new stores could weigh on FY2025 earnings growth, we expect operating leverage to kick in from FY2026.”
RHB Bank Singapore’s Alfie Yeo has kept his “buy” call and $1.98 target price. “We continue like Sheng Siong in the midst of market volatility over US tariffs. It has no export exposure to the US market.”
Yeo says that should a slowdown in domestic consumption materialise from slower economic growth, consumers could down-trade from the higher-end grocery retail to the mass market segment, thus benefiting the group. Key downside risks to his EPS estimates include slower-than-expected store openings, lower sales demand and the inability to maintain gross profit margins at current levels. — Douglas Toh
CSE Global
Price target:
Maybank Securities ‘buy’ 58 cents
Positive outlook but tariff worries
Jarick Seet of Maybank Securities remains bullish about CSE Globalgiven but has nonetheless cut his target price from 67 cents to 58 cents due to the potential impact of US tariffs.
“As CSE Globalhas production facilities in the US, the impact from the Trump tariffs should be minimal,” says Seet in his May 5 note, where he has kept his “buy” call.
Seet estimates that about 10% of the equipment sourced from Europe, Mexico/Southeast Asia is likely to be impacted by tariffs, which could reduce CSE Global’s margins slightly. He points out that CSE Global is also expanding its US facility, which will play well in avoiding these tariffs.
“However, if the tariffs remain, the US and global economy will be impacted and CSE Global might be faced with fewer orders or delays in projects, which may impact profitability,” he adds.
Later in the day, CSE Global reported $155.3 million in new orders in the first quarter ended March 31, down 11.3% y-o-y from the $175.1 million recorded in the same period a year ago. For the quarter, the company reported an ending order book of $616 million, down 14.4% y-o-y.
The company is moving into new markets with growth potential, too. For example, its move to acquire Chicago Communications for US$8.5 million, which had a profit before tax of US$1.8 million ($2.3 million) for FY2024, is for the “strategic purpose” of further expanding CSE Global’s critical communications business in the US.
Earlier, RFC Wireless, acquired by CSE Global last August, helped penetrate the data centre market and secure more than US$15 million in orders in the following quarters.
“We believe this will be the first of many to come as the pipeline of data centres to be built globally, especially in the US, remains robust,” says Seet.
Nonetheless, Seet is still bullish on this stock, given its 50% dividend payout guidance, which will provide stability for shareholders, on top of the positive outlook, with local orders seen as well.
Taking in a “conservative” assumption that US tariffs remain in place and the US economy slows down, Seet has lowered his FY2025 patmi by 14.7% and FY2026’s by 18.8%, leading to his lowered target price of 58 cents based on 11.5 times FY2025 earnings. — The Edge Singapore
