‘Add’ Keppel with a target price of $9.28
Among these companies, Keppel is likely to be the “top earnings performer” due to divestment gains from its real estate segment, stronger asset management profits and stable infrastructure numbers.
The analysts expect the company to report 1HFY2025 profit of $515 million, up from last year’s earnings of $304.1 million, with Keppel monetising some $347 million of assets as at April this year. Keppel could also monetise over $1 billion worth of assets in the FY2025. These could include the paring of its stake in RigCo, the partial sale of its M1 business, along with the disposal of $550 million in real estate assets in the 2HFY2025.
The analysts also expect Keppel to post an interim dividend of 15 cents to 17 cents. They have kept their “add” call with a target price of $9.28, which is based on a sum-of-the-parts (SOTP) valuation. Keppel may see its share price increase should it distribute a special dividend in FY2026 from monetisation gains, the analysts write.
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‘Add’ Sats with a target price of $3.60
Sats, which is also one of CGSI’s country top picks after Keppel, will continue to outperform amid strong global air cargo demand and as the company grows its warehouse capacity across stations.
The company is expected to report a core patmi of $67.6 million during the 1QFY2026, 75% higher q-o-q and 17% up y-o-y as its higher volumes translate to improved profitability.
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According to the latest statistics from the International Air Transport Association (IATA), global cargo demand grew 5.8% and 2.2% y-o-y in April and May respectively, while air passenger traffic increased by 8% and 5% y-o-y in the same period, the analysts note.
That said, a key risk to note is a global recession, which would result in a decline in global air travel demand.
‘Add’ Yangzijiang Shipbuilding with a target price of $2.72
Lim, Kande and Tay are expecting Yangzijiang Shipbuilding to report a core net profit of RMB3.3 billion ($588.98 billion) for the 1HFY2025, 7% lower h-o-h but 9% higher y-o-y.
“We think shipbuilding gross margins have stayed elevated at 29% in 1HFY2025 given the 4% h-o-h decline in China steel prices, but weaker bulk freight rates likely weighed on shipping gross margins,” they write.
They also note that the momentum for global containership orders have slowed since early this year as shipowners adopt a “wait-and-see” approach.
With this, the analysts expect their order win outlook of US$2.5 billion ($3.21 billion) for FY2025 to be backloaded to 2HFY2025 with better clarity on the US tariffs and its implementation. During its 1QFY2025 results, Yangzijiang’s management had kept its FY2025 order win target of US$6 billion, the analysts note.
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‘Add’ Sembcorp Industries with a target price of $8.54
The CGSI analysts like Sembcorp for its “defensive gas earnings” with 1HFY2025 core net profit likely to come in at $566 million, 16% higher y-o-y and 6% up y-o-y. The estimate has also factored in the 5.5 months’ inclusion of 30% of Senoko Energy.
Sembcorp’s reported profit is likely to increase by 38% h-o-h and 23% y-o-y to $664 million thanks to divestment gains of Sembcorp Environment. At the same time, the company’s gas and related services segment could see a 10% h-o-h and 26% y-o-y core net profit growth in the same period.
“We believe all eyes will be focused on the earnings upside expected from the 600MW hydrogen-ready gas plant to be completed by FY2026 and its earnings visibility in FY2027,” the analysts write.
Read their full report here.
‘Add’ Seatrium with a target price of $2.80
The analysts are remaining upbeat on Seatrium’s outlook even though the company’s profits could be affected by foreign exchange (forex) movements given the weakness in the US dollar (USD). However, the stock’s recent “laggard performance” could keep it on investors’ radars. As at the analysts’ report dated July 16, shares in Seatrium closed at $2.21, or 6.76% up year-to-date.
Seatrium is forecast to report a net profit of $153 million, 80% higher h-o-h and 33% up y-o-y, assuming that there are no major exceptions to its balance sheet and, or significant forex impact, the analysts note.
They are also expecting the company’s gross margins to recover to 8% during the six-month period with no major cost overruns. In 2HFY2024, Seatrium’s gross margins stood at 2.7% while its gross margins stood at 3.7% in 1HFY2025.
“During Seatrium’s 1QFY2025 results briefing, management said there were no cost overruns in 1QFY2025 with gross margins improving y-o-y in the absence of any abnormal cost allocations for projects,” the analysts write. Key risks, in their view include cost overruns and project cancellations.
‘Add’ ST Engineering with a target price of $8.40
ST Engineering is likely to report a net profit of $404 million for the 1HFY2025, 11% higher h-o-h and 20% up y-o-y. However, the analysts note that there could be seasonality effects as the group’s 1H results usually account for 45% to 48% of its full-year earnings.
“Specifically for 1HFY2025, we expect [the group’s] Urban Solutions and Satcom earnings to be pushed back to 2HFY2025 due to adjustments in customer spending priorities and launches,” they write.
“We also highlight potential translation impact of revenue and orderbook given that [the] USD weakened 4% versus the Singapore dollar (SGD) q-o-q,” they add.
ST Engineering previously guided that a 1% movement in the USD/SGD rate will impact its revenue by $35 million with a translation impact of $2.5 million and a $2 million transaction impact on its annual results.
The analysts see the group's order win trend as likely to remain firm in 2QFY2025, compared to 1QFY2025’s $4.4 billion.
