Jacquelyn Yow of CGS International, citing growing regulatory risks in Indonesia, has downgraded Wilmar International to “reduce” from “hold” and lowered its target price to $2.70 from $3.15.
“We reckon that regulatory uncertainties in Indonesia would continue to cast a shadow over Wilmar’s near-term outlook,” states Yow in her July 18 note.
On July 15, the Indonesia Business Post reported that the Indonesian National Police Food Task Force had launched an investigation into four major rice producers, including Wilmar, over allegations of mislabelling, where lower-grade medium-grain rice was blended with premium rice and sold as higher quality.
Earlier, Wilmar had already been made to place a security deposit equivalent to some US$725 million ($927 million) with the Attorney General’s Office, linked to an ongoing legal appeal concerning alleged corruption in the issuance of palm oil export permits in 2022.
See also: OCBC's Lim cuts fair value for SingPost to 49.5 cents
In addition, there is rising volatility in commodity prices due to US tariffs and geopolitical tensions, which may cloud its outlook, says Yow.
For the upcoming 2QFY2025 results, Yow expects Wilmar to report earnings of between US$260 million and US$270 million, a decline both q-o-q and y-o-y.
Besides lower margins, Wilmar’s overall sales volume of its food product segment is likely to have remained muted even as promotional costs increased, says Yow.
See also: CGSI's Ong raises target price for BRC Asia to $4.30 on healthy industry fundamentals
Having factored in lower crushing and refining margins, Yow has trimmed her core net profit projections for FY2025 and FY2027 by 0.4% to 12.5%.
Additionally, she has applied a lower valuation multiple of 9 times FY2026 P/E, down from 10 times, to account for the increased regulatory risk in Indonesia. — The Edge Singapore
Keppel DC REIT
Price target:
Maybank Securities ‘buy’
AI, cloud spur data centre demand
Maybank Securities has initiated coverage on Keppel DC REIT (KDC REIT), calling on investors to “buy” at a target price of $2.40. It cited structural demand from digitalisation, cloud migration and artificial intelligence (AI) adoption as key growth drivers.
The target price is based on a 6.7% cost of equity and a 2% medium-term growth rate. Analyst Krishna Guha notes that while the REIT trades at 1.4 times price-to-book (P/BV) and a yield spread of 230 basis points (which is below the historical mean of 278 basis points), the REIT’s track record and strong data centre dynamics justify the valuation.
The global data centre market is poised for strong expansion, driven by rising demand for cloud services, the Internet of Things, edge computing and AI. Yet, demand is expected to outpace supply. Market intelligence provider DC Byte forecasts global data centre demand to grow at a compound annual rate of 19.4% from 2024 to 2028, while supply (both self-built and colocation) is projected to increase by 18.3% over the same period.
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KDC REIT is expected to mirror this growth trajectory. It operates 24 data centres across 10 countries — including Singapore, Europe, China, Australia and Japan — with an occupancy rate of over 96%.
While demand continues to rise globally, supply is increasingly limited due to power and land availability, especially in Europe.
However, Maybank’s TMT analyst Hussaini Saifee sees stronger upside in Asean, underpinned by a multi-year growth cycle. The growth will be driven by the increasing interest from cloud service providers, developers, and investors, amid accelerating digital adoption, geopolitical shifts, and the rise of data sovereignty regulations in Southeast Asia.
“We forecast a 4.9% CAGR in distribution per unit (DPU) from 2024 to 2027, driven by rental escalations and M&A activity,” writes analyst Guha in his report dated July 17.
He also highlights that KDC REIT benefits from the backing of its sponsor, Keppel DC Investment Holdings, a wholly owned subsidiary of Keppel Corp. Keppel brings over a decade of experience in designing, building, and managing data centres and related digital infrastructure, including telecom networks, submarine cables and power systems.
The group currently manages 650 megawatts of gross IT capacity and plans to nearly double that to 1.2 gigawatts (GW). It is also exploring next-generation concepts such as 1GW nearshore net-zero data centres. These initiatives provide KDC REIT with growth opportunities, which are further enabled by its low gearing of 30.2% and an estimated yield of 4.3%, notes Guha. — Nurdianah Md Nur
Fraser & Neave
Price target:
DBS Group Research ‘unrated’
Bottled-up opportunity is ready to flow
DBS Group Research likes Frasers & Neave (F&N), as the research house sees opportunities for the group coming up.
In an unrated report dated July 21, analysts Chee Zheng Feng and Andy Sim say: “We believe the value of the company can be dissected into four key parts: 55.5% F&N Berhad stake, 20.2% Vinamilk stake, Times Publishing and F&N standalone ex-Times Publishing.”
For its F&N Berhad and Vinamilk stakes, the analysts believe the current market price and analysts’ average target prices could be reasonable proxies for valuation purposes, subject to a holdco discount of 10%.
“We value Times Publishing at about 0.8 times enterprise value (EV) to revenue, in line with the lower end of listed peers and one time net asset value (NAV). Lastly, we value F&N standalone at 14 times to 18 times EV/Ebitda, in line with peers and precedent transactions, especially given its high growth rate,” say the analysts, adding that overall, this translates to a fair value per share of $1.79 to $2.06.
The analysts view F&N as a stable business with solid growth prospects. The group operates in the relatively resilient beverage and dairy segments, which offer strong growth potential, supported by rising consumption trends in fast-developing markets such as Malaysia, Vietnam and Myanmar.
The DBS analysts see favourable consumption tailwinds, especially in the dairy category, where it is a key emerging trend in Asian economies such as Malaysia, Vietnam, and Thailand, where the group has dairy operations. While Singapore has a 7 litres per capita consumption, the three countries range from just 0.5 litres to 1.7 litres per capita, indicating substantial room for growth.
F&N currently imports milk for downstream production. With its new integrated farming operations in Malaysia, the group is aiming to be self-sufficient in fresh milk supply. It aims to break even by 2028.
“We believe the capacity can be absorbed by regional markets with an estimated 400 million litres of demand, should key emerging Asean regions hit 3.5 litres per capita consumption,” according to the analysts.
According to Chee and Sim, the stock’s undervaluation likely stems from illiquidity, with a fair estimated EV of $3.4 billion to $3.8 billion. F&N has a low free float of 12.2%, with an average daily traded value of less than $100,000 over the last six months, which likely excludes many institutional investors. — Samantha Chiew
Singapore Telecommunications
Price target:
RHB Bank Singapore ‘buy’ $4.70
Nxera, the key growth engine
RHB Bank Singapore is keeping its “buy” call on Singapore Telecommunications (Singtel) with a raised target price of $4.70, up from $4.50.
The revised target price implies a 13% upside, supported by an estimated 5% dividend yield for FY2025. It also factors in a 4% Environmental, Social and Governance premium and updated valuations of associates, including Telkomsel.
Nxera, the regional data centre arm of Singtel’s Digital InfraCo unit, will be a key driver of growth. Management expects data centre-related ebitda to double by FY2028, driven by increasing demand from cloud workloads powered by artificial intelligence (AI).
“We see the decent pre-sold capacity of new data centres providing a new leg of growth for Singtel’s Digital Infraco business in the mid-to-longer term,” wrote RHB analysts in a July 22 note.
Scheduled to go live in January 2026, Singtel’s 58 megawatt (MW) Tuas data centre has already sold more than 50% of its capacity. In Thailand, Singtel’s joint venture with Gulf Energy and Advanced Info Service has pre-committed 80% of capacity ahead of its mid-2025 launch.
Meanwhile, construction of a 64MW AI-ready data centre in Johor — a joint venture with Telekom Malaysia — is on track for completion in 4QFY2026.
These regional data centres will be equipped with liquid cooling and Nvidia’s GB200 GPUs, enabling Singtel to offer AI/Graphics processor unit-as-a-service, which provides customers with access to advanced AI computing power without the need for costly infrastructure investment.
With 200MW of capacity expected to be operational by the end of 2026 and a long-term roadmap to 400MW, Nxera’s ebitda is forecast to grow at a 29.8% CAGR between FY2026 and FY2028, contributing roughly 6% to group ebitda by FY2028.
Singtel is now eyeing Japan as its next data centre market. Furthermore, the company is part of a consortium building the Asia United Gateway East submarine cable to enhance regional network connectivity and support the growing demand for AI data traffic. The subsea cable is scheduled for completion by 3QFY2029.
RHB also sees capital recycling as a key upside catalyst. Singtel’s 28.3% stake in Bharti Airtel (currently valued at over $48 billion) could be gradually trimmed to align with the Mittal family’s 23% holding. This would unlock more than $8 billion, or 53 cents per share, supporting the group’s expanded $9 billion capital recycling target.
“This also portends upside to the 3 cents to 6 cents in variable realisation dividends (VRD). We expect the VRD to sustain yields of around 5% from FY2026 to FY2028. A 1% sell-down in Airtel would raise 10 cents to 11 cents per share,” notes the analysts.
Singtel remains RHB’s top sector pick, backed by “improving ROIC, capital management and earnings execution as key re-rating catalysts”. — Nurdianah Md Nur
Food Empire Holdings
Price targets:
CGS International ‘add’ $2.73
Maybank Securities ‘buy’ $2.62
Further re-rating is justified, Russian valuation discount less so
William Tng of CGS International has again raised his target price for Food Empire, on expectations that more new business opportunities are on the way with the help of well-placed investor Ikhlas Capital.
Recently, on June 25, Tng had raised his target price for the counter from $1.95 to $2.28. In his July 17 note, he is further hiking his target price to $2.73.
In an after-market announcement on July 17, Food Empire announced a partnership with Capital A Bhd, an investment holding company, to co-develop and launch a new range of ready-to-drink beverages.
Specifically, the collaboration between their respective subsidiaries, Empire International and Santan Food Services, will commence with the launch of a Vietnamese iced coffee product, to be sold on AirAsia flights and through retail channels across the region.
This collaboration also paves the way for Food Empire and Santan to explore further co-branded and private label initiatives across a wider range of beverage and snack products.
The initial product rollout will span both in-flight and on-ground touchpoints. Passengers flying with AirAsia can look forward to a co-branded Vietnamese iced coffee experience onboard. “We believe there could be further business collaboration announcements in time to come.”
While Tng acknowledges that the current collaboration with Santan may not be immediately earnings accretive for Food Empire, he expects it to improve the company’s brand awareness in Asia and allay investor concerns that Ikhlas Capital is only investing in for the 5.5% coupon on the redeemable equity notes (REN) issued by Food Empire. Tng says that any potential share price weakness from the REN is a buying opportunity.
In addition, with the government soon to allocate $5 billion to fund managers to invest in smaller-cap stocks, Food Empire stands to be a beneficiary and can enjoy a re-rating towards its three standard deviations P/E of 17 times, suggesting a target price of $2.73.
In contrast, Tng had previously valued the company at $2.28, which is 14.2 times FY2026 P/E, two standard deviations above its nine-year average P/E from FY2017 to FY2025.
In his separate note on July 22, Jarick Seet of Maybank Securities has also raised his target price for this stock. Besides the tie-up with Santan, Seet points out that, given how Russia was Food Empire’s largest revenue contributor, the company had to bear with a valuation discount against its peers.
“With Russia no longer the dominant contributor and its Asia expansion plans in place, we believe the successful diversification justifies a P/E re-rating with a lower discount to its peers,” he reasons. Besides the narrowing valuation gap, Food Empire is expected to improve its margins further too, as price hike adjustments kick in, says Seet, whose latest target price is $2.62, up from $2. — The Edge Singapore
Boustead Singapore
Price target:
OCBC Investment Research “buy” $2
Positive signals
Having “sent a positive signal to the market”, Boustead Singapore’s share price has reached $1.63, the fair value given by OCBC Investment Research’s Ada Lim.
The share price has gained by a fifth in less than a month and is up by three-fifths since the start of the year. Yet, given that the company’s growth trends remain intact and its valuation remains below historical averages, she has again raised her fair value estimate to $2, while maintaining her “buy” call.
“While we keep our forecasts intact, we relook key assumptions underlying our sum-of-the-parts (SOTP) valuation and make some adjustments,” says Lim in her July 18 note.
First, she increased her FY2026 target price-to-earnings (P/E) multiple for Boustead’s geospatial division from 8 times previously to 10 times.
This aligns with the multiple applied when OCBC first initiated coverage on the company in September 2023 and reflects the division’s status as a crown jewel in Boustead’s portfolio, as well as its exposure to secular growth trends.
Next, she has halved the discount to net asset value (NAV) on Boustead’s real estate division from 50% to 25%. Lim justifies this higher valuation given Boustead’s recent moves to unlock value for shareholders.
Specifically, the transfer of Boustead’s fund and property management businesses to Unified Industrial (UIB), and to potentially put some of its logistics and industrial real estate assets into a REIT. “In our view, there is potential for further share price upside,” says Lim.
She points out that Boustead is currently trading at 8.4 times P/E, which is still below its five- and 10-year historical averages of around 10.3 times and 11 times, respectively.
Catalysts, according to Lim, will come from any positive value-unlocking developments emerging from the ongoing strategic review, as well as ongoing efforts to revitalise the Singapore equity market.
The company will pay a final dividend of 6 cents in total for FY2025, which will go ex-dividend on Aug 8. “Any pullback in share price around this date could present an opportunity for investors to gain exposure to the company,” says Lim. — The Edge Singapore
Singapore Technologies Engineering
Price target:
RHB Bank Singapore ‘buy’ $8.70
Divesting loss-making broadband JV
Sheikar Jaiswal of RHB Bank Singapore has slightly raised his target price for Singapore Technologies Engineering (STE) following news of its latest divestment, where the proceeds are seen as helping to reduce debt further and potentially boosting earnings from lower financing costs.
As announced on July 17, STE and Singapore Power are selling their joint venture, SPTel, to private equity firm Seraya Partners for an enterprise value of $290 million.
The deal implies valuation multiples of 4.1 times EV/Revenue and 21.4 times EV/Ebitda (based on 2024 figures), with an additional earn-out of up to $15 million contingent upon future return thresholds. SPTel reports revenue of $71.5 million in 2024 and a net loss of $4.4 million.
STE says it will book a one-off gain of $83 million selling its 51% stake in broadband provider SPTel.
Jaiswal had earlier estimated that STE would repay some $500 million worth of debt in the current FY2025. A further $140 million reduction in debt would increase STE’s earnings estimates by 1%.
Given ST Engineering’s $29.8 billion order book, Jaiswal sees “upside risk” to his estimates, driven by catalysts such as stronger international defence demand, the aviation business’ transition to a fund model, and strategic mergers & acquisitions (M&A).
“A record-high orderbook ensures strong revenue visibility, supported by structural tailwinds, i.e. rising defence spending and sustained demand for core services,” says Jaiswal, as he increased his target price to $8.70 from $8.65.
If rates continue to trend lower, he projects a target price of $9, based on a new assumption of a 2.25% risk-free rate, versus the 2.75% he currently uses.
For now, his FY2029 forecasts remain below the company’s guidance of 8.6% revenue and up to 13.6% profit CAGR for the FY2024 to FY2029 period. “While our estimates are ahead of consensus, the Street has been progressively revising forecasts upward,” says Jaiswal. — The Edge Singapore
