DAILY MORNING NOTE | 1 September 2025

Trades Initiated in Past Week

Week 36 equity strategy: The largest gainers in August were property, construction, and oil and gas-related stocks. Under our coverage, stocks that rallied the most were PropNex (+74%), Soilbuild Construction (+68%) and Pacific Radiance (+61%). Other sectors with strong performance were commodities and healthcare, such as CNMC (+26%), Q&M Dental (+25%), China Aviation (+21%) and Thomson Medical (+17%). We find small-mid cap stocks moving towards the high teens to low twenties valuations. With the dearth in growth and huge liquidity on the horizon, investors must pay up. Even cyclical companies such as real estate agencies and construction companies that traded sub-10x PE in the past are heading towards their mid-teens, especially with the upswing in earnings. We expect valuation expansion to remain a significant theme. Stocks with growth and still trading at 10x forward PE and below include Soilbuild Construction (7x), Pacific Radiance (7x), China Aviation Oil (10x), and Thakral (10x).

The outlook for the offshore support vessels (OSV) remains positive. Demand from the Middle East continues to grow as countries raise their production targets to maintain market share, and cost per barrel low. Another new source of demand is the installation of offshore wind farms. Taiwan will ramp in 2027, followed by South Korea and Japan. Existing global OSV vessels are old, with orders covering only 6% of the existing fleet. Singapore companies with OSV building and chartering capabilities include Pacific Radiance, Marco Polo, and Penguin International.

We came out of Singtel investor day last week more positive on the outlook. The medium-term special dividend (aka value realisation dividend) is likely to continue for five years, and at the higher end, 6 cents (S$1bn). The pool of assets to be monetised is larger than the S$9bn (which $4bn realised) because the Bharti stake alone available for sale is $12.5-13bn, and there is an opportunity to dispose of more real estate and reduce stakes in subsidiaries. The two largest drivers of the share price will be Bharti’s growth. It is the gift that keeps on giving. Earnings jumped 95% YoY to S$391mn in the June quarter, and the outlook is still strong with mobile prices continually rising, especially with a pending IPO by its competitor. Dividends will also jump as capital intensity eases. Singapore doubling its data centre capacity in 2026 and rolling out GPU-as-a-service for sovereign AI is the next growth driver. On Singapore mobile prices, it was more fingers crossed and Star Wars Episode IV – A New Hope.

Paul Chew
Head Of Research
paulchewkl@phillip.com.sg

Singapore stocks finished the week on a cheerful note amid rising expectations of a September rate cut by the Federal Reserve. Stocks rose 0.4 per cent or 15.92 points to 4,269.70 on Friday (Aug 29). Across the broader market, gainers beat losers 314 to 202, after 1.2 billion securities worth S$1.4 billion changed hands. Keppel led the gains, rising 3.2 per cent or S$0.27 to S$8.75. Thai Beverage was the biggest decliner on the index, losing 1.1 per cent or S$0.005 to finish at S$0.46.

Wall Street stocks fell on Friday (Aug 29) heading into a long weekend, with key employment data due next week alongside other indicators of the economy’s health.
The Dow Jones Industrial Average slipped 0.2 per cent to 45,544.88, while the broad-based S&P 500 Index dropped 0.6 per cent to 6,460.26.
The tech-focused Nasdaq Composite Index tumbled 1.2 per cent to 21,455.55.

Singapore Technical Highlights

* ^ denotes companies placed on SGX Watch-list

TOP 5 GAINERS & LOSERS

Events Of The Week

SG

Local eatery Superfood Kitchen will enter voluntary liquidation with operations at its last outlet, in Raffles City, ceasing on Sunday (Aug 31). Superfood Kitchen faces mounting losses and was not able to agree on rental rates with the landlord, said its Singapore-listed parent, Autagco, in a Sunday bourse filing.

Healthcare provider Thomson Medical has swung into the red with a net loss of S$34.7 million for its six months ended Jun 30, compared with a net profit of S$12.1 million in the previous corresponding period. This came despite a 6.9 per cent uptick in revenue to S$195.6 million for the second half of the 2025 financial year, from S$183 million in H2 FY2024, its financial statement released on Friday (Aug 29) showed

iFast chief Lim Chung Chun ups shareholding, acquiring 60,000 shares at an average price of S$8.29 a share.

Cathay Cineplexes owner mm2 Asia widened its net loss in the second half of its fiscal year ended Mar 31 by more than 10 times to S$101.3 million, from S$8.7 million in the previous corresponding period. This comes despite a 21 per cent increase in revenue for the six months to S$79.7 million, from S$65.9 million in the year-ago period.

Integrated heavy engineering, construction and maintenance service provider Civmec posted a 50.7 per cent drop in net profit to A$16 million (S$13.4 million) for its six months ended Jun 30, from A$32.5 million in the previous corresponding period. This came alongside a 43.1 per cent fall in revenue to A$307.7 million for the second half of its financial year, from A$541.1 million in H2 FY2024.

Food and agri-business giant Olam said that it will close Jiva Ag, a digital farmer services platform developed by the group’s venture arm, Nupo Ventures. A total of 606 employees will be affected.

US

Meta is considering partnerships with rivals Google or OpenAI to enhance artificial intelligence (AI) features in its applications. Leaders at Meta’s new AI organisation, Meta Superintelligence Labs, have explored integrating Google’s Gemini model to deliver conversational, text-based responses for queries submitted to Meta AI, the company’s primary chatbot.

Meta is adding new teenager safeguards to its artificial intelligence (AI) products by training systems to avoid flirty conversations and discussions of self-harm or suicide with minors, and by temporarily limiting their access to certain AI characters.

Oil prices fell on Friday (Aug 29) as traders looked toward weaker demand in the US, the world’s largest oil market, and a boost in supply this autumn from Opec and its allies. Brent crude futures for October delivery, which will expire on Friday, were down 49 cents, or 0.7 per cent, at US$68.13 a barrel, while the more active contract for November was down 57 cents, or 0.8 per cent, at US$67.41. West Texas Intermediate crude futures were 60 cents, or 0.93 per cent, lower at US$63.99.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, The Edge Singapore, PSR

RESEARCH REPORTS

Singapore Telecommunications Ltd – Mobile price repair is largely underway

Recommendation: ACCUMULATE; TP S$4.86; Last close: S$4.3100; Analyst Paul Chew

• 2025 Investor Day: Singtel mentioned that the asset monetisation target is much larger than S$9bn, the scaling up of its data centre as Singapore capacity doubles, finalised its GPU-as-a-service business model, and the need to adopt AI at scale to secure the competitive edge in cost and service levels.
• Countries experiencing mobile price repair are India, Thailand, and Australia. Mobile prices in the Philippines are bottoming, but Indonesia’s price repair is still fragile. Singapore remains in a downward trend, with fingers crossed expectations following the planned consolidation of Simba and M1.
• We maintain our ACCUMULATE recommendation with a higher target price of S$4.86 (prev. S$4.40). We increased our EV/EBITDA multiple from 7x to 8x, aligning with industry peers as operations improve in Australia and earnings from data centres surge. Our discount on associate valuations has narrowed from 15% to 10%. Visibility to monetise key associates has increased. Except for Singapore and Indonesia, most countries have a clear line of sight for mobile price repair. Value realisation (or medium-term special) dividends are likely to be at the higher range of 6 cents with the larger pipeline of assets to monetise.

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