The overall market is buoyant, and there are various key themes investors are looking at, one of which is asset monetisation. Companies that trade at a discount to their respective book values are able to reduce the gap by divesting certain assets at or near the actual market value. Proceeds are then used to pay shareholders as dividends or fund share buybacks, or invest in new growth areas.
Keppel, for one, is a counter included in the latest Absolute 10 Model portfolio selected by PhillipCapital that is aligned with this theme. Keppel has another $2.6 billion of assets to monetise in 2026 to hit the upper end of its $10 billion to $12 billion target, but Chew likes Keppel too for its earnings growth potential. As Keppel began to embark on its shift from a conglomerate to an asset manager, its core earnings have held largely steady.
Chew expects this to change in the current FY2026. For one, a new power plant will start operating in the middle of the year and will help support earnings growth. There is also a submarine cable that runs all the way to the US, which can let Keppel recognise both operations and maintenance earnings. “In the longer term, they’re trying to build a fund management franchise. Rather than I use my money, I take other people’s money, and then I earn a fee out of that, which the market likes,” says Chew.
He is not too upbeat yet on Sembcorp Industries, historically analysed together with Keppel. Investors sold down the stock in August after Sembcorp reported earnings lower than expected, as the previously high margins from its power generation business normalised. Late last year, Sembcorp announced the A$6.5 billion ($5.5 billion) acquisition of Alinta, a power company in Australia.
See also: C-REIT market won’t overtake US REITs: CenterSquare Apac head
The deal, when completed, will weaken Sembcorp’s balance sheet with a bigger debt load of another $5.8 billion, but will change as and when the company begins to monetise some of its other energy assets, specifically the ones in India, estimated at $3 billion. Chew says he is a bit “hesitant” for now, but he expects earnings growth to resume in the second half this year with contributions from Alinta.
Give out medals
In 2025, Singapore Telecommunications’ share price gained by around 50% to lift its market value to some $70 billion. Even so, Chew is bullish on this stock, which is also included in the Absolute 10 portfolio. Chew singles out Singtel’s associate in India, Bharti Airtel, as a key reason for his optimism.
See also: Investing in Singapore’s energy transition
Along with market repair, Bharti Airtel’s earnings and share price have improved. Singtel has been regularly trimming its stake in Bharti Airtel, with the most recent sale last November, where the 0.8% stake fetched $1.5 billion, which Singtel could then either pay its own shareholders as dividends or reinvest in new growth areas such as data centres. “Bharti is a gift that keeps giving,” says Chew, referring to the regular monetisation from Airtel, where another $6 billion worth is seen. “I don’t know which management decided to buy Bharti — give him a medal, but not to the one who bought Optus — take back the medal,” adds Chew, without directly naming the stream of troubles suffered by Singtel’s unit in Australia.
Nonetheless, Australia and other Singtel regional associates are seeing a recovery in mobile earnings. In Thailand, Singtel is likely to monetise its stake in local entities estimated at $2 billion, further cheering investors.
Another top-performing Straits Times Index stock last year was Singapore Technologies Engineering. Following a 2025 gain of around 90%, which has lifted its valuation to around 30 times earnings, Chew’s current rating on the counter is “neutral”. However, his view might change because of the ongoing structural uplift in global defence spending. “We have this law of the jungle, so everyone is arming up. If you’re a sovereign nation now in Europe, or here, you’ll be thinking, maybe I need to arm up, which is a good idea for ST Engineering,” he says.
Everyone’s favourite sector
Glenn Thum, research manager at PhillipCapital, dubs the local banks “everyone’s favourite sector”, given the handsome capital appreciation and generous dividends enjoyed by shareholders since the pandemic, thanks to record earnings when the interest rate cycle was up. “However, the main question everyone is trying to answer now is whether or not the banks’ earnings can be sustained going into 2026.”
He adds that in the most recent 3QFY2025 results, the banks, as expected, reported lower margins again, because of the rate cuts. “But what’s interesting to see is that while margins have actually declined, the net interest income has not gone down as quickly as the margins. And the reason why they can do this is because of loan growth,” says Thum, adding that housing loans have been a key driver.
In the most recent monthly data, loan growth in November 2025 grew by around 5.8%, and the banks themselves are guiding for mid-single digit growth, which Thum deems “very positive” and will extend into 2026 and help buffer the decline in net interest income and margins.
On the other hand, deposit growth is growing continuously, with an increase of 7.3% y-o-y in November. A higher deposit base means it is easier for banks to manage their margin compression. No longer do they need to fight for deposits by offering rates as high as 4%, unlike two years ago. “If you go outside now and find a fixed deposit paying above 1.5% you are very, very lucky,” says Thum.
For more stories about where money flows, click here for Capital Section
In the meantime, there are lots of fixed deposits placed over the last few years maturing and customers, instead of putting them away in FDs again, might park them in current accounts — with marginal rates of 0.05% or so — instead, as they prefer the flexibility of quicker access to their funds compared to FDs. Yet, when the depositors do so, banks get practically free funding from these growing current account balances. And of course, fee income, especially for DBS and OCBC, has become a key earnings driver because of their respective wealth management franchises.
Surprise upside
Specifically for DBS, which is also in the Absolute 10, it is the only one among the three banks to guide for an absolute dividend payout amount of 66 cents per share per quarter, an increase of 6 cents. In addition, there is also the quarterly 15 cents per share in capital return dividend, which brings each quarter’s payout to 81 cents this year. Thum believes DBS has more than enough resources to continue the step up, and that a FY2027 yield of 6.1% is forecasted, versus 5.8% or so this year.
Oversea-Chinese Banking Corp (OCBC) enjoyed a run of around a-fifth in the last quarter of 2025. Even so, Thum has included this counter in the Absolute 10 as well. He likes the bank for its wealth management franchise, but another reason why OCBC is favoured is because of the “surprise upside” that might come from its capital management.
Thum rues that OCBC’s management has become “infamous” for refusing to give better clarity on how it plans to manage its capital. “They will say, ‘we will think about it’,” he adds. “They haven’t said anything yet, but we are hoping that this will be one of the main surprises for OCBC.”
The bank’s CET-1 ratio is now around 15%, which is 1%, equivalent to $2.7 billion, from the deemed optimal level of 14%. Retained earnings alone will be enough to prop up the ratio. According to Thum’s assumption, if OCBC’s earnings do not grow and payout is maintained, its CET-1 can reach 22% come 2030. “We believe OCBC will be able to continue the special dividend at an additional 10% payout ratio for at least two more years till FY2027,” he reasons.
Thum notes that OCBC is likely to see further decline in margins and net interest income due to lower rates, but earnings will actually grow slightly by around 5% because they will be driven by loan growth and fee income from wealth management. “Many customers are shifting away from traditional fixed deposits, into wealth management. So that will help to offset, and we’ll see a bit, at least a small, mid, single-digit kind of earnings growth,” he says.
Thum is less positive on United Overseas Bank (UOB). In contrast to DBS and to a lesser extent OCBC, UOB has underperformed in the past year, exacerbated especially in the last two months of the year, after the banks’ 3Q results, where UOB surprised the market with its “pre-emptive” provision that brought its total allowance to $1.61 billion. Liquidity coverage ratio for UOB reached around 100%, which is lower than the other two, between 130% and 150%. Thum notes that UOB has not provided visibility on changes to its capital management, other than that its dividends will stick to the 50% payout ratio.
Finally, UOB’s fee income is “quite weak” relative to the other two, given that UOB acquired Citi’s consumer business in several markets such as Malaysia, Thailand, Vietnam and Indonesia, investors were expecting more fee income. The main reason they gave, and which Thum believes, is that their customers are quite prudent, and prefer not to risk putting their funds in wealth management products and stick with fixed deposits instead.
