Alfie Yeo of RHB Bank Singapore has kept his “buy” call on Venture Corp, given its attractive valuation and yield of around 6%.
After recalibrating his earnings projections following the company’s 1HFY2025 results, Yeo, in his Aug 25 note, has derived a higher target price of $15 from $12.60, based on a sector re-rating and positive earnings outlook.
Earnings for the six months to June were down 8.6% y-o-y to $113 million, on the back of an 8.8% drop in revenue to $1.3 billion.
Nonetheless, on a sequential basis, Venture’s revenue for the most recent 2QFY2025 was an improvement of 4.7% y-o-y, and net margin was held steady at 9%.
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To sweeten the numbers, Venture will be paying a special dividend of 5 cents per share, in addition to the 25 cents per share interim dividend it typically pays.
In addition, there has been some positive news regarding Malaysia, where Venture has a significant manufacturing operation, which will be subject to a tariff rate of 19% instead of the previously anticipated 25%.
Venture’s outlook, from Yeo’s perspective, remains positive, driven by higher-value solutions, differentiated capabilities, new product introductions and a better certainty of customer orders following the announcement of US tariff rates for Malaysia.
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Yeo is keeping his earnings projections for FY2026 and FY2027, as he anticipates earnings growth driven by higher customer orders.
His new target price of $15 is based on 18 times blended FY2025 and FY2026 earnings, in line with its peers’ reratings. His previous valuation multiple was based on 15 times. — The Edge Singapore
Hong Leong Asia
Price target:
OCBC Investment Research ‘buy’ $3.40
‘Constructive’ outlook
Ada Lim of OCBC Investment Research has initiated coverage of Hong Leong Asia (HLA) with a “buy” call and $3.40 fair value price, given its “constructive” outlook.
HLA is in the business of building materials and, via a separately listed China-based subsidiary, China Yuchai, manufactures and sells powertrains as well.
In her Aug 25 report, Lim points out that HLA’s powertrain division is set to enjoy growth thanks to “burgeoning” demand from data centres.
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“Growth in exports to emerging markets would also expand access to a larger total addressable market and cushion any softness in China’s domestic sales,” says Lim.
She notes that the building materials division will see “softer” numbers for the current FY2025 as a result of reduced capacity from equipment replacement.
Nonetheless, she sees clear growth ahead, as HLA is riding on the ongoing construction market upcycle in Singapore and continued infrastructure investments in Malaysia.
In 1HFY2025, HLA has reported earnings of $56 million, up 13.1% y-o-y, yet another sequential improvement following the pandemic.
An interim dividend of 2 cents per share has been declared, double teh amount declared in the same period last year.
Lim says that the company has historically maintained a strong balance sheet and a healthy net cash position.
“We see potential for the company to deploy cash to enhance shareholder returns, either by acquiring synergistic, accretive businesses, or by increasing dividend payouts,” she adds.
“We are also not ruling out the possibility that HLA may be a potential beneficiary of the ongoing Equity Market Development Programme,” says Lim.
All things considered, Lim, using a discounted cash flow valuation methodology, has derived a fair value of $3.10 on this counter. — The Edge Singapore
Singapore Telecommunications
Price target:
DBS Group Research “buy” $5.04
Narrowing the holding company discount
Sachin Mittal of DBS Group Research has kept his “buy” call and raised his target price for Singapore Telecommunications (Singtel) from $4.58 to $5.04, on expectations that the company is set to enjoy a boost from the rising market value of its regional mobile associates.
In addition, with the impending consolidation of the Singapore mobile market, Singtel is seen to enjoy renewed growth in this segment as well.
In his Aug 22 note, Mittal points out that between 2009 and 2017, there was a 69% correlation between Singtel’s share price and aggregate market cap of its associates: Bharti Airtel, AIS, Telkomsel & Globe.
As Singtel’s core ebit, which excludes associates, started to decline post-3QFY2018 due to rising competition in Singapore and Australia, this correlation weakened to -16%. This was also reflected in the high holding company discount of 52%.
“With improving core ebit and opportunistic divestments, this correlation has revived to 63% in the last one year, which suggests further reduction in HoldCo discount to below 10% from 24% now,” says Mittal.
Singtel’s share price, according to the analyst, is set to be supported by its active capital management programme, including prospects of higher value realisation dividends (VRD).
Operationally, the company will benefit from market consolidation in Singapore, even though it is not a party to any of the recent mergers and acquisitions.
From the higher core earnings from operations, Singtel may then redeploy capital to accelerate core ebit growth through data centres and a fledgling business of selling GPUs as a service.
Mittal has raised the value of Singtel’s associates to $4.10 per share, up from a previous valuation estimate of $3.66, as he switches from market prices to consensus’ target prices of associates, assuming a 10% holding company discount.
For the unlisted Telkomsel, Mittal has raised his 12-month forward PE from 11.3 times to 15 times, on expectations of a structural recovery from the current quarter.
Singtel’s core business, meanwhile, is kept at 18.5 times 12-month forward P/E ratio (unchanged), at 94 cents per share, thereby deriving a new target price of $5.04.
Key risks flagged by Mittal include a decline in the Australian dollar, which will affect the earnings reported in Singapore dollars. Irrational competition in Australia could also hinder recovery, he warns. — The Edge Singapore
ISDN Holdings
Price target:
CGS International ‘add’ 44 cents
Forex pain, but recovery prospects remain
ISDN Holdings’ 1HFY2025 was hurt by foreign exchange (forex) losses, below the expectations of William Tng of CGS International. Nonetheless, with prospects of recovery seen in its underlying businesses, plus small caps as a whole enjoying higher valuations from the market boosting measures, Tng kept his “add” call and 44 cents target price on ISDN Holdings.
For the half year ended June, ISDN reported revenue of $212.9 million, up 22% y-o-y, led by both recovering industrial activity in China and Asean. If not for unfavourable forex, revenue would have gained by 27%.
The company’s hydropower business in Indonesia generated $32.5 million in revenue, up from $5 million in 1HFY2024.
In the period, ISDN incurred $5 million of unrealised, non-cash forex revaluation losses in 1HFY2025 due to the weaker US dollar.
The company, according to Tng, is “cautious on the strength of the cyclical recovery in China but will continue to grow its capabilities, reach, and addressable markets to create long-term growth”.
“ISDN believes its core industrial automation business should continue to grow in China and throughout Asia. The group is encouraged by the early progress in Thailand, Malaysia and Taiwan, adding to its core geographies in China, Singapore and Vietnam,” says Tng.
With another two plants to be completed in FY2026, the company’s mini hydropower business is expected to continue delivering recurring profits and revenue.
Following the most recent 1HFY2025 results, Tng has reduced his FY2025 earnings forecast by 50.5% to take into account the unrealised forex loss in 1HFY2025.
For the coming FY2026 and FY2027, Tng expects earnings to recover, but, for now, he has similarly trimmed his projections by 12.5-20.6% to take into account a bigger proportion of lower margin earnings from hydropower.
Nonetheless, Tng has kept his 44 cents price target, which is based on 13.5 times P/E, which is the 10-year FY2016 to FY2025 average, as the underlying business is experiencing some recovery, and small caps’ valuations have risen from the market boosting measures.
For him, re-rating catalysts include higher-than-expected net profit contribution from its hydropower business segment, a faster pace of economic growth in China as it stimulates its economy and a stronger recovery of the semiconductor sector.
On the other hand, downside risks include weak customer demand if the global economy continues to slow, and an increased risk of bad debts as economic conditions worsen. — The Edge Singapore
BRC Asia
Price targets:
CGS International ‘add’ $4.30
PhillipCapital ‘accumulate’ $4.10
Healthy industry fundamentals
Natalie Ong of CGS International has kept her “add” call on steel supplier BRC Asia following higher 3QFY2025 earnings that were slightly ahead of her estimates.
With healthy industry fundamentals along with a high dividend payout of more than 6% that is sustainable through FY2027, Ong has raised her valuation multiple, thereby deriving a higher target price of $4.30, from $3.40 previously.
Selling prices dropped 14% in the quarter, but volume and margins gained, implying the benefits of economies of scale enjoyed by the company, says Ong.
She points out that BRC Asia holds a strong market position within Singapore, with its own management estimating a share of between 55% and 60%.
It is one of the two key suppliers providing steel for Housing Development Board (HDB) build-to-order (BTO) projects and one of the six major players supplying rebar in the Singapore market. Significant projects won recently include a $570 million order for the construction of the airport’s Terminal 5, which helps lift BRC Asia’s order book to $2 billion as at July.
Down the road, BRC Asia is expected to grow. It has completed the first phase of the acquisition of a related company, Southern Steel Mesh.
“The acquisition, which the management believes is a value-unlocking play, will require updating SSM’s machinery and aligning SSM to best-in-class practices/benchmarks, putting SSM in a better position to compete with other major downstream steel manufacturers that have ageing machinery and dated technology,” says Ong.
In a separate note, Yik Ban Chong of PhillipCapital has similarly raised his target price for the stock, while keeping his “accumulate” call. From $3.40 earlier, he now rates this counter worth $4.10.
“With about 60% market share in steel rebar in Singapore, we believe BRC Asia can secure more contracts with the rising construction demand in Singapore,” says Chong. — The Edge Singapore
Singapore Post
Price targets:
OCBC Investment Research ‘hold’ 49.5 cents
Maybank Securities ‘hold’ 51 cents
Asset sale pause; in operational decline
Jarick Seet of Maybank Securities has downgraded his call on Singapore Post from “buy” to “hold”, along with a lower target price of 51 cents from 63 cents.
His previous bullish call has been largely premised on the company’s asset monetisation moves. However, there is likely to be a pause in the divestments and weaker operations cannot justify current valuations.
As a recap, the sale of its key Australia unit has helped yield a 9-cent per share dividend payout to shareholders and a chain of 10 post offices is up next, reportedly at $55.5 million.
However, there are a couple of additional moving parts, which suggests that the next key asset, indicated as non-core, the SingPost Centre, may not be divested soon.
SingPost is still looking for a new CEO, and along with that, a clear new strategic direction has to be laid down — a process which Seet figures will take between three and six months.
Meanwhile, as indicated by its 1QFY2026 business update, SingPost’s remaining domestic mail operations are still in a structural decline and its international postal business is facing competition as well.
Given this pause, Seet has included a 20% discount in his NAV valuation and has derived a new target price of 51 cents from 63 cents.
In the face of weaker organic operations, he has also cut his FY2026 and FY2027 earnings forecast by 36% and 35%, respectively.
“SingPost’s local core business continues to endure a structural decline in volumes and margin pressure along with tight competition. Even with a potential rise in postal rates, we think it will be difficult for SingPost to generate the earnings needed to justify its valuations.
“With a lack of catalysts in monetisation of non-core assets now that majority has been done, we believe share price performance may be muted,” says Seet.
In a separate note, Ada Lim of OCBC Investment Research has also turned more cautious, given the lower operating numbers. Company-wide, operating margin was 2.1%, down from 3.9% in the year-earlier quarter.
Lim, citing SingPost’s management, says with a streamlined structure, the group will now focus on maximising asset utilisation and driving operational efficiency.
“We get a sense that SingPost will no longer be pursuing any sizeable divestments, such as that of SingPost Centre, at least until the company’s strategy has been reset – in which case it would be challenging to justify the value of the company based on its earnings potential alone, in our view,” says Lim.
Lim has kept her “hold” call but has cut her fair value from 59 cents to 49.5 cents. — The Edge Singapore
Singapore Exchange
Price target:
RHB Bank Singapore ‘neutral’ $15.90
Valuation ‘appears stretched’
The Singapore Exchange (SGX) has enjoyed a “strong start to the new fiscal year”, says RHB Bank Singapore analyst Shekhar Jaiswal. SGX’s current FY2026 began on July 1.
July data was strong, with implied securities and derivatives volumes ahead of 1HFY2026 estimates, says Jaiswal. However, the stock’s forward valuation looks stretched unless July strength is sustained and annualised, he adds.
Hence, Jaiswal keeps his “neutral” call and $15.90 target price unchanged in an Aug 20 note, as “much optimism appears priced in”.
Based on July data, SGX’s securities market turnover rose to $33.8 billion, up 27% y-o-y and 30% m-o-m, with securities daily average value (SDAV) at $1.47 billion, up 27% y-o-y and 19% m-o-m. This implies 1HFY2026 SDAV being 11% above Jaiswal’s estimate.
SGX noted that liquidity in small- and mid-caps surged 94% m-o-m to $261 million, driven by retail participation and six consecutive months of institutional net buying.
Jaiswal expects this momentum to persist on a full-year basis, supported by regulatory initiatives to broaden equity participation beyond Straits Times Index (STI) constituents. “We forecast y-o-y SDAV growth of 8.8%, 5.0% and 5.0% for FY22026 to FY2028.”
In July, SGX welcomed NTT DC REIT and Info-Tech Systems to the Mainboard, Lum Chang Creations to the Catalist board and the secondary listing of China Medical System.
SGX expects heightened IPO activity with some 30 firms in the pipeline, which is twice Jaiswal’s assumption of 15 in FY2026 and 10 in each of the following two financial years.
Meanwhile, SGX’s derivatives volume climbed 25% y-o-y and 12% m-o-m to 29.3 million contracts, with derivatives daily average volume (DDAV) 23% higher y-o-y and 1% higher m-o-m at 1.28 million. This implies 1HFY2026 DDAV at 7% above Jaiswal’s estimate.
Positive surprises came from fixed income, currency & commodities (FICC) derivative contracts, with commodities volume hitting a record 9 million — up 76% y-o-y — on strong iron ore, freight, and petrochemicals trading. Jaiswal forecasts DDAV growth of 7.9%, 9.9% and 10.1% for FY2026 to FY2028.
According to Jaiswal, SGX’s valuation “appears stretched” unless July’s strong data can be “sustained and annualised”.
SGX’s share price has risen 29% year to date and 53% over the past 12 months. “While its forward P/E remains below that of Asian peers, securities turnover also lags behind,” adds the RHB analyst. “We expect continued growth in trading activity, and maintain our valuation at a target P/E of 23.5 times.”
Jaiswal is relatively bullish, with his FY2026 to FY2028 profit forecasts 4.6%, 5.6% and 5.6% above that of the consensus.
SGX has proposed an increase of 0.25 cents in its dividend every quarter from FY2026 to FY2028. This is subject to the approval of SGX’s shareholders at its annual general meeting (AGM) to be held on Oct 9.
Should the proposed increase go through, FY2026 will see a total dividend payout of 44.5 cents, while FY2027 and FY2028 will see total dividends of 48.5 cents and 52.5 cents per share, respectively.
“Although management has guided for higher dividends and our estimates are more optimistic, the implied FY2026 dividend yield of 2.8% remains well below the market average of 5%,” notes Jaiswal. — Jovi Ho
Dezign Format
Price target:
UOB Kay Hian ‘buy’ 37 cents
High margins, ROE and cash-generative
UOB Kay Hian analyst Heidi Mo initiated a “buy” call on Dezign Format Group in her Aug 20 report with a target price of 37 cents. Dezign Format’s initial public offering (IPO) was priced at 20 cents before it started trading at 26.5 cents on Aug 15.
Mo notes that the company has built up a strong track record over 35 years in the provision of events, exhibitions and decor services, scoring clients such as Singapore Airlines, LVMH, DBS and Marina Bay Sands.
Mo also likes Dezign's business model, which provides high margins, high return on equity (ROE) and is cash-generative. After including a net $4.8 million in IPO proceeds, Dezign Format will have a net cash position of about $11.2 million in August, she adds.
“Dezign has been able to generate superior net margins of 13%–15% and ROE of above 35% over the last two years, thanks to its asset-light, fully-integrated in-house capabilities and good execution business model,” she notes.
Looking ahead, Mo expects Dezign Format’s business growth to be driven by rising demand for meetings, incentives, conferences and exhibitions (Mice) and experiential events. Its production hub in Malaysia is expected to begin operations by the year-end, which can help improve project delivery time and save costs.
“Dezign generated an impressive two-year revenue and earnings CAGR of 35% and 77%, respectively, for FY2022–FY2024. We expect a healthy orderbook of $24 million as of Dec 31, 2024, to drive a healthy core earnings growth of 20%/16% for FY2025/FY2026, respectively,” Mo writes.
Mo’s target price of 37 cents is based on an FY2026 P/E of 10.5 times, representing a 10% discount to its peers’ average. Based on her estimates, the company is expected to generate a superior net margin of 14.4% and a dividend yield of about 4% for FY2026.
Mo’s patmi forecasts for FY2025 and FY2026 are at $5 million and $7 million, respectively. — Felicia Tan
Suntec REIT
Price target:
JP Morgan ‘overweight’ $1.45
Better occupancy, lower interest cost
On Aug 20, JP Morgan upgraded Suntec REIT to “overweight” from “neutral”. Since Covid-19, its distributions per unit (DPU) have stagnated and at times have fallen on a y-o-y basis.
DPU for 2QFY2025 ended June 30 was 1.59 cents, down from 2.347 cents in the last quarter of 2019. The low point was a DPU of 1.51 cents in 1QFY2024; hence, on a y-o-y basis, the first two quarters of this year show DPU growth.
JP Morgan expects further gains in DPU thanks to a better funding environment with a lower cost of debt, decreasing from 4.1% in FY2024 to 3.4% in FY2027. On the other hand, it will see a gradual top-line recovery from FY2026 on backfilling of vacancies, positive reversions and anticipated restart of divestments.
“We upgrade Suntec REIT to overweight with a higher December 2026 price target of $1.45, as we believe Suntec REIT is on the cusp of a three-year 6.4% DPU CAGR on the back of improving top-line and lower interest costs.
Property consultant JLL says Sydney’s CBD 20-year average sublease vacancy rate is 1.3% and expects the rate to trend lower. “This is likely as demand remains steady while new office completions are limited compared to the supply influx over the past couple of years.”
The JLL report adds that TPG, an anchor at 177 Pacific Highway, a Suntec REIT property, is moving to Barangaroo, a precinct in Sydney’s CBD.
Suntec REIT owns 177 Pacific Highway and 21 Harris Street in Sydney; 477 Collins Street and Southgate Complex in Melbourne; and 55 Currie Street in Adelaide. The average committed occupancy rate in Australia was 88.6% as at June 30, but with 55 Currie at just 52.4%, which is being backfilled.
“Suntec’s top 10 office tenant, TPG Telecom (107,360 sq ft, 2.1% of December 2024 office gross rental income), is vacating 177 Pacific Highway in North Sydney for 200 Barangaroo Avenue. However, we believe the lease is only due in FY2028 as there are no expiries at the property in FY2025-2027, based on Suntec REIT’s annual report. Suntec REIT has backfilled three floors at 25%–30% reversions and we expect income contribution to restart in 1Q2026,” JP Morgan says.
Suntec REIT is also in discussions to backfill occupancies at The Minster Building in London, to 94% (from 85% currently), according to JP Morgan. “We expect better contribution from Suntec City Mall (+2%) with the completion of the AEI/linkbridge to Guoco Midtown in 2HFY2025,” its report adds.
The JP Morgan report also did an in-depth analysis into Suntec REIT’s debt structure. Out of Suntec REIT’s total debt of $4.06 billion, only $170 million is priced at 4%. The remaining debt is likely to be repriced at lower rates. About 83% of Suntec REIT’s debt is denominated in Singapore dollars, where the three-month Singapore overnight rate average (Sora) has fallen from more than 3% on Jan 2 to 1.68% as of Aug 21.
While Suntec REIT refinanced debt at higher costs in 1HFY2025, overall financing costs still fell 0.24% pts in 1HFY2025 to 3.82% from 4.06% in 4QFY2024 on lower floating Sora rates, the report states.
JP Morgan expects DPU growth of 1.9%, 9.2% and 8.4% in 2025, 2026 and 2027, respectively. “Our price target of $1.45 implies FY2026/2027 yield of 4.8%/5.1% at 0.5/0.6 standard deviations below mean forward yield/yield spread of 6.3%/ 4.8% which we believe is justified given strong DPU growth.” — Goola Warden
