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UOB KAYHIAN |
PHILLIP SECURITIES |
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2025 Budget A Broad-Based Budget For All
While sounding a word of caution for medium-term government revenues, Prime Minister Wong delivered a budget that continued to defray the pain of inflation with an eye toward clean energy, climate change and helping lower-income households. No new equities market proposals were announced, which may disappoint investors in the short term. Our top picks are BAL, CD, KEP, OCBC, STE, STM, SCI, ST, VMS and YZJSGD.
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Singapore Strategy Fiscal windfall support handouts galore
▪ FY2024 overall fiscal surplus was S$6.6bn (0.9% of GDP), much higher than estimated surplus of S$0.8bn (or 0.1% of GDP). Revenue was S$6bn higher than expected due to higher corporate income tax and net investment returns. FY2025 is expected to show a surplus of S$6.8bn (or 0.9% of GDP).
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PHILLIP SECURITIES |
PHILLIP SECURITIES |
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Singapore Banking Monthly DBS gets the ball rolling
▪ January’s 3M-SORA was down 19bps MoM to 2.95%, the lowest since Nov 2022 and 34bps lower than the 4Q24 average, reflecting the Fed Rate cuts. Bank share price performance was muted (+3%) in Jan 2025 as investors waited on the sidelines for 4Q24 results.
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Singapore Air Transport – Feb25 Cargo headwinds from cancellation of De Minimis
▪ The aviation sector saw mixed performance in Jan25. SATS extended its losses amid concerns over the US-China tariff weighing on cargo demand. In contrast, SIA and CAO rebounded on expectations of robust results.
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| CGS CIMB | LIM & TAN |
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Singapore Strategy Addressing short- and long-term needs
■ Singapore’s Budget 2025 provide near-term help to citizens to address high cost of living while keeping the nation’s longer-term needs in focus ■ We expect the higher cash handouts to benefit supermarket operators such as SSG and DFI and retail REITs such as FCT, CICT, MPACT, LREIT. ■ Tax incentives to boost local equities market could benefit SGX; low carbon objective longer-term positive for renewable energy indirect plays (SCI, KEP)
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UOB ($38.65, up 4 cents) reported a record net profit of S$6.0 billion, up 6%, for the financial year ended 31 December 2024. UOB’s market cap stands at S$65.2bln and currently trades at 10.3x forward PE and 1.3x PB, with a dividend yield of 4.6% (With special dividend of S$0.5, yield would be 6%). Consensus target price stands at $40.63, representing 5.1% upside to current share price. Meanwhile, DBS and OCBC trades at price-to-earnings (PE) ratios of 11.7x and 10.4x, respectively, with price-to-book (PB) ratios of 1.9x and 1.4x. DBS offers a normalized yield of 5.2% at 2.4cts/share (6.6% if considering $0.60 capital return) and OCBC offer a yield of 4.8%. The consensus target prices for DBS and OCBC are $48.25 and $17.76, implying an upside of 5.3% and 0%, respectively. We stay constructive on Singapore banks given their attractive yields.
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