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UOB KAYHIAN |
CGS CIMB |
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Market Strategy Opportunities Abound Despite Muted Earnings Growth In 2025
For 1H25, we believe that a number of stocks within our universe should deliver strong returns in the near to medium term, backed by sustainable dividend yields despite our modest below-consensus 1.2% EPS growth forecast for our covered STI stocks in 2025. We forecast a 2025 year-end target of 4,115 for the STI, implying a 10% upside from current levels. Our top picks are BAL, CD, KEP, MINT, OCBC, SCI, ST, STE, VMS and YZJSGD. For the small/mid caps, we like CENT, CSE, MPM, SSG and VALUE.
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ST Engineering Looking forward to new targets
■ We look forward to STE’s Investor Day in Mar 25, with potential new targets announced including international defence outlook and capital management. ■ We forecast STE to achieve a three-year consecutive double-digit earnings growth in FY25F, driven by execution of projects from S$27bn order book. ■ Re-rating catalysts include sizeable order wins from defence & public security as well as urban solutions segments. Reiterate Add and TP of S$5.30.
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CGS CIMB |
UOB KAYHIAN |
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AIA Group Regional financial conference takeaways
■ Understanding recent expansion into new regions in mainland China and its implications for future VONB growth was a key focus for investors. ■ Despite an unprecedented four consecutive new regions approved by regulators within one month from late-Oct, share price has barely reacted. ■ This suggests much investor pessimism on the value of AIA’s China business, in our view, and ignores AIA’s resilience to China headwinds. ■ AIA HK’s domestic strength and MCV risks were also a focus for investors. Reiterate Add and sector top pick. TP unchanged at HK$111.
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Telecommunications – Malaysia 9M24: In Line; Rollout Of A Second 5G Network In 2025
9M24 results came in broadly within expectations, with sector earnings growing 4% yoy, driven by: a) 2% yoy service revenue growth, with Maxis achieving 4% yoy growth; b) strong underlying demand for home broadband; and c) good cost discipline. Key events to look out for in 1H25 include: a) fixed line competition; b) U Mobile potential 5G consortium; c) government’s exit from DNB, and d) CelcomDigi’s synergistic savings in 2025. Maintain MARKET WEIGHT. Our top pick is CelcomDigi.
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LIM & TAN |
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We were recently hosted to a site visit at Civmec Limited’s (S$1.12, unchanged) flagship facility in Henderson, Western Australia. The facility is set on more than 200k sqm land and includes a 29k sqm fabrication hall and a state-of-the-art assembly hall with 53k sqm of usable floor space. It is situated within the Australian Marine Complex (AMC), home to a portion of Australia’s naval fleet and utilized for naval shipbuilding and sustainment. Capitalized at S$569mln, Civmec trades at 10.3x forward P/E and 1.3x P/B with a dividend yield of 4.7%. Civmec’s Henderson Assembly Hall is a key asset in the naval precinct and the largest heavy engineering facility in Australia. As a construction and engineering services provider, we think Civmec may benefit from opportunities in infrastructure spending as Australia ramps up the delivery and sustainment of naval vessels. While we remain optimistic on Civmec’s growth trajectory and mid-long term outlook, management has indicated that delays to the timing of key project awards are expected to result in lower levels of activity for 2HFY25. Recommend “Accumulate on Weakness” as we await the replenishment of order books.
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