In anticipation of the market’s digesting the implications of rising tariffs and trade uncertainties, the team at CGSI are suggesting a nimble approach for Singapore market investors in 2025.

CGS International (CGSI) has raised its MSCI Singapore target to 409.3 points for end-2025, pegged to the analysts’ 12-month target price for its component stocks. 

This translates to 15 times 2025 P/E. The Singapore market is currently trading at 13.6 times 2025 P/E and offers a 4.1% dividend yield.

Post-Singapore market’s 3QFY2024 results, CGSI projects 5.6% and 6.8% higher core net profit growth for FY2024 and FY2025 respectively. This is lifted by financials, capital goods, telcos, consumer and internet services sectors. 

To this end, the analysts raise their FY2024 and FY2025 core net profit estimates by 1.6% and 2.4% q-o-q respectively, led by banks and internet services. This is moderated by lower estimates for gaming and commodities. 

In anticipation of the market’s digesting the implications of rising tariffs and trade uncertainties and the consequential inflationary impact on the interest rate outlook, the team at CGSI are suggesting a nimble approach for Singapore market investors in 2025. 

The team’s three investment themes include high-yield and high-growth stocks, value-up plays as well as interest rates and bond yields.

They also see potential positive outcomes from the Monetary Authority of Singapore’s (MAS) review to strengthen the equities market development in Singapore, which could catalyse value-unlocking or restructuring activities in the market. 

Big-cap picks

The analysts’ conviction picks in the space include CapitaLand Ascendas REIT A17u (CLAR), iFast Corporation (iFast), Sembcorp Industries U96 (Sembcorp), Seatrium, Singapore Telecommunications Z74 (SingTel), United Overseas Bank U11 (UOB), Sats Group (Sats), Singapore Technologies Engineering S63 (ST Engineering), Yangzijiang Shipbuilding (Yangzijiang) and Keppel Corporation Bn4 (Keppel).

They write: “Post-3QFY2024 results, we forecast the Singapore market to deliver a higher total return of around 10.9% in FY2025… We think investors will continue to prize yield plays in Singapore amid global policy uncertainties, due to a relatively more stable currency.”

Among big caps, at projected dividend yields of 5.0% to 5.7% in FY2025, the CGSI analysts think banks will continue to be well-owned ahead of their full-year results and will provide potential for special dividends.  

Meanwhile, apart from robust dividend yields, the team believes that investors should also keep an eye on stocks offering both high yields of above 5%, as well as in delivering above-market-average earnings growth. 

“Our screening below highlights Hongkong Land, StarHub Cc3, Venture Corporation V03 (Venture Corp) and ComfortDelGro C52 (CDG) as having both high dividend yields and double-digit FY2025 earnings growth. For investors with greater risk appetite, we highlight growth stocks such as Sea, iFast, Seatrium, Sats and ST Engineering,” writes the team. 

Small-cap picks

Meanwhile, small-cap picks include CSE Global 544, Hong Leong Asia H22, PropNex and Singapore Post S08 (SingPost).

They note that the highest dividend-yielding stocks include BRC Asia Bec, PropNex, APAC Realty Cln and CSE Global, with projected FY2025 dividend yields of 5.8% to 8.3%, while they add that stocks within the sweet spot of having both high yields and above-market earnings growth include CSE Global, Japfa Ud2 and PropNex. 

“Apart from robust dividend yields, we believe investors would also be keen to find alpha in stocks that are projected to generate above-market average earnings growth.”

Value-up plays

As the MAS reviews its strategies to revive the Singapore equity market, some companies have commenced plans of their own to achieve better valuations. In the tech manufacturing space, two companies — UMS Holdings 558 (UMS) and Grand Venture Technology Jlb (GVT) — have announced plans for a secondary listing in Malaysia. 

Meanwhile, Hongkong Land has released plans to review its business and improve its book value. In order to align senior management’s interests with those of shareholders, Hongkong Land plans to introduce a new long-term incentive plan (LTIP), which will set a range of qualitative and quantitative progress milestones and metrics to incentivise the execution of this strategy. 

Singapore stocks trading below book 

Based on Bloomberg data as at Dec 2, the team at CGSI notes that there were 80 stocks with a market cap above US$200 million ($268 million) that were trading at or below 0.90 times book value. 

By market cap, 36 stocks were below US$500 million, 20 stocks were between US$500 million and US$1 billion, while the remaining 24 stocks were above US$1 billion. 

By industries, 51% of the stocks trading below book were from the property/REITs sector, and 10% were from the commodities sector. Together, these cyclical sectors accounted for 61% of the stocks trading below book.