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CGS INTERNATIONAL |
CGS INTERNATIONAL |
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Lum Chang Creations Malaysia could kick in earlier than expected
■ We raise our FY6/27F order win assumptions to S$170m (from S$140m), as we believe there are opportunities for LUCC to win tenders in Malaysia. ■ Niche project mix and execution should support elevated FY27F/28F GPM of c.29%/28% (FY26: c.35%), higher than FY23-25 average of c.20%. ■ Reiterate Add with unchanged S$0.64 TP, based on 14x FY28F P/E, with an attractive FY27F yield of c.8% (FY27F DPS: 2.4 Scts).
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UOL Group Long-awaited Marina Sq. project to take off
■ UOL’s subsidiary SingLand announced on 1 Sep 2026 details of the Marina Square Redevelopment project, which is to be completed in 2031F. ■ We estimate capex cost of c.S$1.5bn-1.6bn, GDV of c.S$3.1bn, RNAV accretion of c.7.6%, and average 5.6% p.a. earnings uplift over four years. ■ Reiterate Add, with an unchanged TP of S$12.83, based on a 25% discount to RNAV (1 s.d. above mean since 2011).
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| UOB KAYHHIAN | UOB KAYHIAN |
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Alpha Picks: Large Caps Pulling The Weight Highlights
• Our Aug 26 Alpha Picks beat the FSSTI by 2.4ppt and 3.3ppt on a priceweighted and market-cap-weighted basis respectively. • For Sep 26: Add SATS; remove HLA and UGAI. • Sep 26 Alpha Picks: BKM, CIT, FEH, HUAGL, KEP, NTTDCR, OCBC, OTEK, RSTON, SATS, SIE, UIBREIT, VALUE and VMS.
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Keppel DC REIT (KDCREIT SP) Building Scale In Hyperscale DCs
Highlights • KDCREIT is acquiring two freehold, hyperscale fully fitted (colocation) data centres (DC) located in Inzai City, Greater Tokyo, Japan. The two DCs are 100% occupied and provide an attractive built-in contractual rental escalation of 2.8%. Management estimated the acquisition to be accretive by 2.6%. • KDCREIT continues to build scale in hyperscale DCs. Potential acquisitions from sponsor pipeline, such as SGP9 in Singapore and a DC in Western Tokyo, are likely to materialise in 2028. • KDCREIT has a resilient Singapore-centric portfolio and is well supported by sponsor Keppel. Maintain BUY. Target price: S$2.99.
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| LIM & TAN | UOB KAYHIAN |
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STTGDC today announced the completion of its acquisition by a KKRled consortium comprising funds managed by global investment firm KKR and Singtel ($4.46, up 0.01), and unveiled a refreshed global brand, marking the beginning of the company’s next chapter as a global digital infrastructure platform. Singtel’s is capitalized at $72.7bln, trades at forward PE of 23.4x, yields 4.2% while 1 year consensus target price of $5.36 implies a potential upside of 20%. We like Singtel’s continued monetization plans of matured assets to recycle into faster growing assets in the datacenter space while at the same time increasing dividend payments to shareholders via share buy backs and special dividends on top of their normal dividend payments. We maintain an Accumulate rating on Singtel given its attractive yields, continued share buy backs coupled with asset monetization plans to realize value for shareholders.
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Internet AI Capex: Returns Remain Attractive, Funding Risk Diverging
Highlights • AI/AI cloud remained the bright spot in 2Q26, with Alibaba and Baidu delivering 45%/50% yoy revenue growths in AI cloud respectively and Tencent reporting healthy cloud growth on AI demand. However, the surge in capex and Alibaba’s HK$80b (US$10.3b) placement shifts the AI debate from project returns to funding duration and capital structure. The investment cycle is pressuring near-term FCF, but stronger utilisation, proprietary chips and higher-margin AI services should improve compute economics over time. • Maintain MARKET WEIGHT. Top BUY: Alibaba.
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