• In 2024, three big trends emerged that are shaping the future of earnings in the region, according to Maybank Kim Eng: -- artificial intelligence (AI) is making waves, -- the support industry for offshore oil & gas is bouncing back, and -- companies are restructuring for new themes such as decarbonisation. • First off, AI is starting to show real potential, especially in banks and healthcare. And increasingly, there's a need for beefed-up cybersecurity. • Meanwhile, on a comeback trail, the operations and maintenance sector is booming thanks to increased demand for energy, including green energy like offshore wind. In the internet sector, fintech is booming. • Lastly, corporate makeovers by S-REITs and industrials are riding on long-term themes such as decarbonization and urbanization. For more, read excerpts of Maybank Kim Eng's investment case for its top picks for 2025 ... |
Excerpts of Maybank Kim Eng's report
| Investment case for our Top Picks |
DBS -- Strong fee growth from large AUM base as rates fall should support NoII (non-interest income).
Concurrently, hedging together with lower cost of funds should support NII (net interest income).
Significant investments in AI and IT should start delivering cost efficiencies and new revenue opportunities in the near term. Management is committed to higher capital returns.
UOB -- Successful integration of Citi acquisition along with investments in technology and high-for-longer interest rates could drive EPS upgrades going forward.
A CET1 (common equity tier 1) uplift from BASEL 4 transition and a SGD2.5bn share buyback allocation also indicates stronger capital management commitments, showing promising shareholder value creation.
Marco Polo Marine -- With MPM CSOV close to completion, we expect utilisation for the first 2 years to be close to 95% with average rates of around USD50k/day. Manpower shortage issues has also improved with 3rd party repairs likely to rebound in FY25E. We expect 1-2 CTV (crew transfer vessel) acquisitions in 2025 and charter rates increasing by 5-10%. |
Thomson Medical Group -- Strong portfolio of healthcare assets in the region, which offers relatively high growth potential. It's Vietnam specialist facility can serve Cambodia, Vietnam, Laos, Myanmar for a strong captive market.
In Singapore more government support for parents and centralised health database could offer opportunities.
Sembcorp Industries -- SCI's ROIC is set to improve from 5% to 10% by FY25E, with overseas projects boosting ROE and attractive financing from Temasek’s ownership.
This should catalyse valuations to re-rate higher, in our view.
CDLHT -- CDLHT is well-positioned to benefit from the recovery in visitor arrivals, with projected DPU growth of 12% in FY25E supported by falling borrowing costs and accretive acquisitions.
It has shifted toward managed contracts and a balanced lease mix, alongside a geographically diversified portfolio, ensuring income stability and long-term growth potential.
Capitaland Integrated Commercial Trust -- DPU is set to grow at a 4.8% CAGR (FY23-FY26E), supported by organic and inorganic growth, margin expansion, and lower borrowing costs.
FY25E growth may slow due to a high base, but backfilling office spaces in Germany/Australia and ION Orchard contributions will provide support. Financing expenses are expected to remain steady.
Mapletree Logistics Trust -- We believe that MLT's disciplined capital recycling and a continued focus on high-growth markets like Vietnam and Malaysia allows it to navigate FX volatility and the borrowing cost pressures while being able to stabilise occupancy rates and improve reversions.
MLT is well-placed to deliver resilient earnings growth and potential DPU recovery.
Sea Ltd -- Sea benefits from strong growth in ASEAN and is also expanding ‘Free Fire’ in Africa, targeting growth in emerging markets with lower-spec mobile devices.
We forecast FY23-26E revenue CAGR of 14%. Adjusted EBITDA is expected to grow at 35% CAGR, with gaming EBITDA growing at low single digits in FY25-26. Free cash flow is projected to turn positive in FY24E, with a cash balance of USD8.6b.
 Grab Holdings -- Grab has solidified itself as a leading super-app in SEA this year achieving a 17% YoY growth and achieving positive free cashflow and improved financial health. With potential strategic acquisitions (Chope) and leadership position in all the markets it operates in, Grab is positioned to benefit greatly in the underpenetrated ASEAN market. |
Maybank KE's full report is here.