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PHILLIP SECURITIES |
CGS CIMB |
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Phillip 3Q25 Singapore Strategy Going local
3 July 2025 Review: Singapore equities reported a slight loss of 0.5% in 2Q25, breaking a streak of four consecutive quarters of gains. But in July, the market hit its all-time high of 4,011. Gainers this quarter have been led by companies monetising assets such as HK Land and DFI (Figure 2). Defence remains a strong theme as a global arms race is underway. Weakness was in stocks impacted by political risk (Figure 3). REITs are beginning to recover as yields become more attractive, following lower SORA and fixed deposit rates (Figure 4).
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ISOTeam Ltd Likely unaffected by construction bottleneck
■ We think ISO will be unaffected by engineering/heavy-tonnage crane bottlenecks, given its in-house capabilities and focus on A&A, R&R and C&P. ■ S$21m of contract wins announced, driven by A&A, solar & C&P projects. ■ Reiterate Add on ISO’s recurring business model and profit/margin recovery.
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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Tenaga Nasional (TNB MK) An unexpected tax twist
Overhang to persist The Federal Court decision for Tenaga’s 2018 tax dispute bodes negatively for Tenaga’s remaining cases, thus extending an already longstanding overhang. Nevertheless, potential provisioning could be deemed as oneoff, while the overall dispute amount is manageable relative to Tenaga’s cash reserves (thus posing a low risk to dividends). Tenaga’s operational earnings remain resilient with potential upside risk from contingent capex deployment. Maintain BUY with a MYR15.50 TP (DCF-based).
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Genting Plantations (GENP MK) JS-SEZ project selling like hot cakes
Visible property earnings in the coming quarters We visited GENP’s new sales galleries, and the projects’ progress in Kulai and Batu Pahat. Both projects are selling well. Kulai’s demand was boosted by optimism over JS-SEZ’s developments. We believe the success of these projects will be reflected in improving property earnings in 2H25 and 2026. This is underpinned by its high unbilled sales of MYR157m (as at 31 Mar) or ~1.2x FY24 revenue, and U.Reka’s successful launch on 10 May. Maintain BUY & TP of MYR6.89 on 19x FY25 PER (-1SD of 8Y mean).
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| LIM & TAN | LIM & TAN |
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Oiltek ($0.56, unchanged) announced a press release by SEDC Energy (wholly-owned subsidiary of Sarawak Economic Development Corporation, a statutory body of the Sarawak Government) in relation to a Sustainable Aviation Fuel (“SAF”) pilot plant programme. Sarawak to collaborate with global technology provider Sulzer for its Sustainable Aviation Fuel (SAF) pilot plant programme through its new energy arm, SEDC Energy (SEDCE), the wholly owned subsidiary of Sarawak Economic Development Corporation (SEDC). Oiltek’s market cap stands at S$240mln and currently trades at 24x forward PE and 9.5x PB, with a dividend yield of 2%. Despite relatively higher valuations, we continue to remain constructive on Oiltek in the long term given it’s successful tilt towards the renewable energy sector. Oiltek remains one of the few companies to thrive in this sector, and given strong company fundamentals, we are confident that Oiltek will continue on it’s orderbook winning momentum moving forward which should bring the stock to new highs. We continue to recommend an ACCUMULATE ON WEAKNESS rating on Oiltek.
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Capitalized at S$144mln, Soilbuild Construction trades at 4.0x forward P/E and 1.7x P/B, with a dividend yield of 2.3%. As a builder of residential and business space properties, Soilbuild stands to benefit from an increase in construction demand across Singapore. Order book of S$1.26 billion in pipeline projects suggests improved revenue visibility for at least the next few years. Consensus TP of $0.97 represents a 12% potential upside. We have an “Accumulate” recommendation in view of its positive outlook. |
