ANALYSTS SAY: Buy, Sell, Hold (24 Mar)

PHILLIP SECURITIES

UOB KAYHIAN

Singapore REITs Monthly

Valuations are cheap 

▪ The S-REITs Index fell 2.9% in February 2025, after gaining 0.2% in the previous month. The top performer for the month was Paragon REIT (PGNREIT SP, non-rated), gaining 9% after the proposed privatisation offer of S$0.98 in cash. The worst performer was Manulife US REIT (MUST SP, non-rated), falling 23.2%, as financial metrics remain stretched. The overseas retail sub-sector was the top performer in February, gaining 1.4%, while the worst-performing sub-sector was overseas commercial, falling 10.3%.

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Hong Leong Asia (HLA SP)

Attractive Valuations Despite Recent Rise In Share Price Performance

HLA is set to post strong earnings growth for 2025-27, driven by its two main business segments. With a significant market share across its key markets, the building materials segment faces a robust pipeline of mega infrastructure and HDB projects. The diesel engine segment also faces strong volume growth across new markets. In our view, HLA remains undervalued given the positive outlook for its businesses. Maintain BUY with a higher SOTP-based target price of S$1.46.

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UOB KAYHIAN

UOB KAYHIAN

COSCO SHIPPING Ports (1199 HK)

2024: Core Earnings In Line; Expect Low Single-digit Throughput Growth In 2025

CSP’s 2024 core net profit of US$301.8m (+4.9% yoy) was in line with our expectation, at 101.2% of our forecast. The miss at the operating profit level was more than offset by strong JV/associate performance and interest cost savings from debt refinancing. Management guides CSP’s portfolio equity throughput to grow in line with the industry average at a low-single-digit growth rate in 2025. CSP is trading at 7.6x/7.2x 2025/26F PE and offers decent yields of 5.4%/5.6%. Maintain BUY. Target price: HK$5.90.

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Meituan (3690 HK)

4Q24: Results In Line; Stable 2025 Margin On Competition And Overseas Expansion

Meituan’s 4Q24 results were in line with expectations. Total revenue grew 20% yoy to Rmb88.5b, in line with our and consensus estimates. Non-IFRS net profit was Rmb6.2b, with net margin expanding 5ppt yoy to 11%, in line with consensus forecasts. For 2025, we are cautiously optimistic on Meituan in view of solid progress in overseas expansion and AI development, offset by margin pressures due to the intensely competitive landscape. Maintain BUY with a lower target price of HK$216.00.

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Summary of Xiaomi Corp Research Report

Rating: BUY (as of 21 March 2025)
Last Close: HKD 56.50
Fair Value: HKD 66.30

Key Highlights:

• EV Business Growth: Xiaomi’s electric vehicle (EV) segment is showing strong momentum, with narrowing losses in Q4 2024.
• IoT Expansion: The company is driving overseas growth for its Internet of Things (IoT) business.
• AI Investments: Xiaomi is accelerating investments in artificial intelligence (AI) to enhance its product ecosystem.

Investment Thesis:

• Xiaomi, founded in 2010, focuses on smartphones, IoT products, and internet services.
• It is the smartphone market leader in India and gaining market share in Europe.
• Ranks among the top three globally in smartphone shipments (per Canalys).
• Xiaomi’s business model combines affordable, high-quality smartphones with an IoT ecosystem and internet services monetization.
• Strong cash flow supports its EV expansion, but challenges include macro headwinds and rising competition.

Here’s a concise summary of the research report:

Great Wall of Robots: A Self-Sustained Rise – Robotics Sector

• Market Growth: China’s humanoid robot market is projected to reach RMB574bn by 2035, growing at a 47% CAGR, aligning with global growth (45%). With 50% adoption, labour costs could fall by 45%.

• Competitive Landscape: The market is in its early stages, with 60+ manufacturers and no dominant leader. Companies like UBTECH and XPeng have a first-mover advantage, but long-term success depends on manufacturing capability and diverse applications.

• Consumer Electronics’ Role: Overlap in supply chains between consumer electronics and humanoid robots benefits component suppliers, especially in optic sensors. China’s electronics hub is transitioning to robotics, led by Xiaomi and BYDE.

• Key Investment Picks: Preference for robot producers (Xiaomi, BYDE) over component suppliers, as their established market presence supports a re-rating.

  • Xiaomi: Strong potential to commercialize humanoid robots, with a projected 22% labour cost reduction by FY26 and 9% earnings growth.
  • BYDE: Internal robot adoption could boost FY26 earnings by 4%.

• Valuation: Robotics stocks remain attractive despite the AI boom.

  • Chinese players trade at ~33x forward P/E, still reasonable.
  • Xiaomi: FY25 PEG of 1.2x vs. global peers at 1.6x.
  • BYDE, AAC, Sunny: 13-27x P/E, 31%-40% earnings CAGR (FY24-26F), more attractive than Keyence’s 35x P/E and 9% CAGR.

Investment Takeaway:

The robotics sector is seeing strong momentum, with China’s market poised for rapid expansion. Xiaomi and BYDE are well-positioned to benefit from this growth, making them top picks over component suppliers.