BRC Asia Ltd - Still record order book
- 1H25 revenue/PATMI were within expectations at 44%/47% of our FY25e forecast. 2Q25 revenue increased 1.9% YoY due to a recovery in delivery tonnage, which offset a ~14% YoY fall in steel prices.
- Steel prices are still falling because of weakness in China’s property sector, which continues to weigh down on BRC Asia’s top-line performance. However, we believe that the expanding delivery tonnage (we estimate +19% YoY in 2Q25) can offset the fall in steel prices in 2H25e. Volume of steel delivery is supported by elevated order book levels which consists of Singapore’s major construction projects. Order book is maintained at record levels of S$1.5bn, a 15% YoY increase.
- We maintain ACCUMULATE with a higher target price of S$3.40 (prev. S$3.15). We lowered WACC to 11.0% (prev. 11.6%) due to the visibility of orders. We expect volume expansion to drive revenue growth of 9% YoY in FY25e. BRC Asia is acquiring a 55% stake in Southern Steel Mesh for S$18.2mn to expand revenue sources beyond Singapore. We don’t expect this acquisition to materially impact FY25e revenue/PATMI, which are unchanged. BRC Asia trades at an attractive FY25e dividend yield of ~5.8%.
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SATS Ltd
Embedded resilience to tide through FY26F
■ 4QFY3/25 net profit of S$38.7m (+18.3% yoy) was slightly ahead of our S$34.2m estimate despite lower SoAJV contribution and impairment costs.
■ Management shared that SATS’s cargo tonnage handled has outpaced global cargo demand since 3QFY24, reflecting market share gains.
■ We think SATS’s growing market share will support earnings growth in FY26F even as ongoing trade tensions with US threaten global cargo demand.
■ Reiterate Add with a higher DCF-based (WACC: 12.2%) TP of S$3.60. iscount. Maintain BUY. Raise SOTP-based target price to S$4.58.
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Singapore Telecommunications Ltd - The Giving Pledge
- 2H25 results were within expectations. Revenue and underlying PATMI were 97%/99% of our FY25e forecast. The 12% YoY rise in underlying net profit to S$2.78bn was supported by a 48% rise in Optus EBIT and 48% growth in associate Bharti earnings.
- The mid-term asset recycling target has been raised from S$6bn to S$9bn. Proceeds from assets recycled continue to be distributed as a value realisation dividend of 3 to 6 cents annually. Singtel will add a S$2bn share buyback over three years. Core dividend remains a payout ratio of 70-90% of the underlying net profit.
- Our ACCUMULATE recommendation is maintained. We raised our target price to S$4.40 (prev. S$3.77). We narrowed our discount to associates from 20% to 15% as Singtel intensifies its monetisation efforts. We raised the EV/EBITDA of the subsidiaries from 6x to 7x due to the stronger operating performance. Lowering the discount on associates invariably leads to more volatility and momentum in our target price. Operationally, mobile price repair and operating leverage are underway in Optus. Conversely, Singapore mobile remains under intense competition but is undertaking a significant realignment of costs. We believe asset monetisation efforts will be from disposing of the 7.7% stake in Gulf Development (~S$2bn) and another 3% in Bharti Airtel (~S$5bn).
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Yangzijiang Shipbuilding (Holdings) (YZJSGD SP)
Big Backlog – But New Order Wins Needed In The Medium Term
YZJ’s 1Q25 order wins were weak at just 5.0% of its annual target, with management sounding cautious amid global tariff uncertainties. Despite this, its record US$23.2b orderbook provides revenue visibility into 2028, supported by strong margins and delivery progress.
Growth plans remain intact with yard and LNG investments. Share price volatility may persist, but execution strength and earnings resilience support our BUY rating. Target price lowered to S$3.29 (S$3.50 previously).
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LHN Limited ($0.505, unchanged), through its indirect wholly-owned subsidiary, Coliwoo Holdings Pte. Ltd., has entered into an agreement on 21 May 2025 to divest of its entire shareholding in a subsidiary that owns the property located at 115 Geylang Road, Singapore 389218. The shares will be sold to real estate development company CWL Properties Pte. Ltd. for a consideration of S$25.8 million. Estimated net proceeds after deducting outstanding bank loans and related costs will amount to approximately S$10.7 million The transaction involves CWL Properties Pte. Ltd. acquiring a 100% stake in Emerald Properties Pte. Ltd., an indirect wholly-owned subsidiary of the Group and the registered owner of the 115 Geylang Road property. The Group acquired the 115 Geylang Road property in 2021 and has since operated it as a hotel.
We have an Accumulate on Weakness on LHN as we see its upcoming spin-off of Coliwoo as a potential re-rating catalyst for its share price as it un-locks further value for shareholders. Yield is an attractive 6% while PE is only 6x.
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Xiaomi Corporation
Chip ambitions coming true
■ Xiaomi realises its own-chip ambitions to join Apple, Samsung, and Huawei as the fourth smartphone OEM to have in-house SoC capabilities.
■ Xiaomi introduces its first electric SUV, the YU7, marketing it as a premium electric SUV. We think the YU7 could become a best-seller in China.
■ Reiterate Add with an unchanged TP of HK$73.0 based on 30x FY26F P/E.
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