The Budget 2025 speech for Singapore brought joy to many as Singaporeans are set to receive various kinds of vouchers as part of the government’s comprehensive support plan to help people cope with rising costs of living.
As listed by Prime Minister Lawrence Wong in his Budget speech on Feb 18, the vouchers and other handouts included $800 in Community Development Council (CDC) vouchers, SG60 vouchers of between $600 and $800, along with U-Save rebates, Climate Vouchers and Life SG credits of varying amounts.
Analysts from DBS Group Research, RHB Singapore, CGS International and UOB Kay Hian (UOBKH) note that these handouts will not only defray rising costs but also enhance the spending power of the average Singaporean.
Supermarket operators Sheng Siong Group and DFI Retail Group (DFI), which runs the Cold Storage and Giant chains here, are the two obvious beneficiaries of these handouts.
“We believe this substantial additional support could not only drive a switch from cash to vouchers but also significantly boost supermarket sales volumes and overall industry growth,” write DBS analysts Kim Yan Yeo and Fang Boon Foo in their Feb 19 note, as they maintain their $1.80 and $3 target prices respectively for Sheng Siong and DFI Retail.
The analysts also believe the handouts will particularly boost retail-related spending at suburban retail malls where supermarkets, food courts and F&B operators are practically a given presence.
See also: More on Illumina, the Nasdaq-listed genetic testing firm named in PM Wong’s Budget 2025 speech
Analysts have also named several REITs with retail assets to be among the beneficiaries of these handouts. For example, Frasers Centrepoint Trust (FCT) owns Northpoint and Causeway Point; CapitaLand Integrated Commercial Trust (CICT), meanwhile, owns Bedok Mall and Tampines Mall among others; while VivoCity, Singapore’s largest mall, is the “crown jewel” of Mapletree Pan Asia Commercial Trust (MPACT); and Lendlease Global Commercial REIT (LREIT) owns JEM and 313@Somerset.
RHB Bank Singapore’s target prices for FCT and CICT are $2.35 and $2.30, respectively, while UOBKH figures LREIT is worth 72 cents per unit.
However, UOBKH has some reservations with regard to the positive effect of these vouchers. “We do not expect significant revenue growth as they essentially function as an alternative payment method to cash for groceries and essential items,” reasons UOBKH, which has kept its “hold” call on coffeeshop operator Kimly , along with a target price of 34 cents.
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Tech boost
In a bid to keep Singapore’s technological capabilities well-honed, the government plans to spend $1 billion on a national semiconductor R&D fabrication facility that will be equipped with industry-grade tools for researchers and industry partners to prototype and test new innovations. “This will further enhance Singapore’s attractiveness in the semiconductor sector,” says DBS.
According to DBS, Singapore’s semiconductor industry excels in advanced nodes of 7nm and above, but so-called “mature” nodes continue to play a significant role. The “most promising areas” are integrated device manufacturers and high-end outsourced assembly and test services, to which AEM Holdings is exposed, says DBS.
In addition, the government is topping up $3 billion to the National Productivity Fund, which can then be used to give a leg up to tech-heavy industries such as medical technology and life sciences.
According to DBS, other local listed companies such as Venture Corp, Grand Venture Technology and Frencken Group are potential beneficiaries as they all have varying levels of exposure to these segments.
Grand Venture, for one, generates 20% of its revenue from the medtech and life sciences segments; Frencken derives 40% of its sales from the analytical services, life sciences, and medical technology sectors. Venture Corp, which does not give a detailed breakdown of its various customer segments, is known to acknowledge these sectors as “secular growth segments”.
Interestingly, Venture Corp, whose business is to provide manufacturing services, has been named by the Ministry of Finance (MOF) as a local partner to US-based, Nasdaq-listed Illumina, which develops DNA sequencing and sells DNA sequencing systems. It runs its Asia Pacific headquarters out of Singapore and has a manufacturing facility here, too.
“In partnership with local enterprises such as Venture Corp and Sunningdale Tech, the facility manufactures the full range of Illumina’s products, such as the MiniSeq and MiSeq i100 genome sequencing machines, as well as the consumables that are needed to operate them,” states MOF in a separate release providing more information on companies cited by Wong. “These partnerships have helped Singapore’s local enterprises build new capabilities in innovation and expand into new industries,” adds MOF.
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Venture Corp is a leading Singapore-listed blue-chip manufacturer while Sunningdale Tech used to be listed here as well before it was privatised by a group of investors that included current SGX chairman Koh Boon Hwee.
In response to The Edge Singapore’s queries, a spokesperson from Venture Corp says its partnership with Illumina has spanned “over a decade”. “Over this time, we have consistently driven breakthroughs in new sequencing products through leveraging our expertise in R&D and manufacturing innovation.”
The partnership with Illumina has helped Venture expand beyond its existing domains and accelerate its growth in the life sciences industry, the spokesperson adds. “In parallel, Venture has developed advanced technology modules for precision control applications under its subsidiary ... These modules help shorten [the] product development lead time.”
RHB Bank Singapore’s Alfie Yeo is similarly upbeat on the impact of the Budget on the overall tech sector. “We believe that in the longer term, the announced measures supporting the manufacturing and technology sectors’ growth could benefit semiconductor and manufacturing-exposed stocks like Frencken Group and Venture Corp,” he adds.
Furthermore, with the anticipated tech recovery into 2025, Yeo is keeping his “overweight” call on the manufacturing and technology sector. As customers work down their inventories and the supply chain normalises, Yeo sees orders recovering in tandem with stronger customer demand. “Stocks in both semiconductor and tech manufacturing are expected to benefit from the pick-up,” says Yeo, who has a “buy” call on Frencken along with a $1.71 target price, while Venture Corp is similarly rated “buy” along with a target price of $15.40.
Construction boom
From the perspective of UOBKH, the construction sector will be a “clear” beneficiary of the Budget. The government plans to top up the Coastal and Flood Protection Fund by $5 billion, where construction works over the longer term will include building sea walls, barrages and tidal gates, as well as reclaiming land via the Long Island Development off East Coast Park, where new homes and amenities will eventually figure.
These longer-term projects aside, the construction sector is already enjoying a strong and visible outlook given the ramp-up in the development of new public housing of around 50,000 new flats between now and 2027, plus massive developments in the form of Changi Airport’s Terminal 5, further expansion of the Tuas mega port and also a stream of other small projects including the redevelopment of various hawker centres.
The Building and Construction Authority had earlier penned down a construction demand forecast for 2025 of between $47 billion and $53 billion, with a 64:56 split between the public and private sectors. In the medium term up till 2029, BCA projects annual average demand at between $39 billion and $46 billion per year.
UOB Kay Hian lists down stocks ranging from construction material providers like BRC Asia , Pan United, Hong Leong Asia and Tai Sing Electric; crane operator Tiong Woon Corp; construction and refurbishment players like ISOTeam; and last but not least, dormitory operators like Centurion Corp and Wee Hur.
‘Anaemic measure’ or a boost?
In his Budget 2025 speech, Wong briefly touched on the ongoing stock market review. The main goal is to make Singapore stocks more attractive and the Singapore Exchange (SGX), a listed entity here itself, will clearly benefit if the outcomes of the review are deemed effective.
As flagged by the Monetary Authority of Singapore on Feb 13, tax incentives to encourage more listings on the SGX are being introduced as initial measures to rejuvenate the Singapore stock market.
For one, Singapore-based companies that intend to go public will receive a corporate income tax rebate of up to $6 million for companies with a market value of at least $1 billion and $3 million for those below this level, per year of assessment.
Next, new fund managers listing in Singapore will receive a concessionary tax rate of 5% on their qualifying income. Thirdly, tax exemption is also applicable to fund managers with substantial investments with more than 30% of their AUM in Singapore-listed stocks.
“These initial steps could solidify the SGX’s position as a leading multi-asset exchange,” says DBS, which is calling SGX a “buy” along with a target price of $14.
Lim Siew Khee of CGS International expects the various measures to potentially raise net new money inflows, total equity trading volumes and liquidity levels on SGX, spurring heightened interest from regional funds in Singapore-listed entities.
UOBKH, meanwhile, is looking for other measures to be announced down the road besides these tax incentives, which it calls an “anaemic measure” that may disappoint the market. “We look forward to more substantial and meaningful proposals in the coming months,” says UOBKH.
Shekhar Jaiswal of RHB is taking a cautious stance for now as well. He maintains that a material improvement in SGX’s moderating earnings growth outlook is dependent on elevated local equity market sentiment, an increase in the number of new initial public offerings, successful new product launches and a favourable outcome of the ongoing market review exercise. “We await greater clarity on each of the above points before including their impact in our estimates,” he says.
Similar to UOBKH, Jaiswal is of the view that the tax incentives in themselves will not be enough to enhance the market breadth or improve the liquidity of the already languishing small and mid-cap companies. He has a “neutral” call and a $12.80 target price on SGX.
