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UOB KAYHIAN |
UOB KAYHIAN |
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REITs – Singapore Starting To Regain Lost Ground
S-REITs have had a negative correlation of 0.59 against the S&P 500 Index. Thus, SREITs could mean revert and register gains even as the S&P 500 falls over the next six months. Our preferred BUYs are CICT (Target: S$2.37) and LREIT (Target: S$0.72) for suburban retail, DCREIT (Target: US$0.88), KDCREIT (Target: S$2.55) and MINT (Target: S$2.70) for data centres, and PREIT (Target: S$4.85) for healthcare, which are relatively less affected by the impact from tariffs. Maintain OVERWEIGHT.
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ComfortDelGro Corporation (CD SP) New Entrant, More Competition
It was announced that Grab would enter the domestic street-hail segment as Singapore’s sixth taxi operator, increasing competition for incumbents such as CD. We expect a slight negative impact to CD as taxi utilisation rates would likely fall with GrabCab’s impending entry, compressing segmental margins. However, as CD is underpinned by strong earnings growth and a decent 2025 dividend yield of 5.8%, we maintain BUY with the same target price of S$1.76.
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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Singapore Strategy Surviving Liberation Day
Trump Tariffs are bad, but not that bad Singapore has not been spared from Liberation Day tariffs, but it is in a less bad position than the region. This may further reinforce its safe haven status. We see opportunities from themes such as supply chain relocations, China stimulus and domestic spending. Cash flow rich, secular themelinked sectors such as Industrials, Telcos, Land Transport, Healthcare, SMIDs should be relative beneficiaries. Higher rate cut risks could be a tailwind for REITs, especially those with domestic exposure. Reciprocally, banks may see some stress from tighter margins, but high capital returns visibility could provide some offset. Our Trump Tariff Winners: STE, SCI, RFMD, CD, CICT, FCT, ST, CSE, ISOTEAM, SE, GRAB.
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Malaysia Banking Of tariffs and banks
In favour of the domestic-centric banks In the event of slower economic growth, our sensitivity analysis, which assumes a 1%-pt cut in loan growth, a 25bps cut in the OPR and a 20% increase in credit cost across the board, points to a fairly manageable 3- 7% impact on earnings, while dividend yields would still be attractive, ranging from 4% to 6%. Least impacted, earnings wise, would be the domestic-centric banks such as PBK, AMMB and HLBK, all of which are BUYs on our list.
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ST ENGINEERING
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