Broker: Lim & Tan Securities
Date of Report: 23 May 2025

Singapore Market Insights: Key Stock Picks, Fund Flows, and Sector Performance for May 2025

Market Overview: STI Performance and Global Market Snapshots

The Singapore Straits Times Index (FSSTI) closed at 3,882.6, registering a 1.3% month-to-date (MTD) gain and a 2.5% year-to-date (YTD) increase. Trading volumes reached S\$1,160.7 million in daily market value, with 982.2 million shares exchanged. Over the past 52 weeks, the STI has fluctuated between highs of 4,005.2 and lows of 3,198.4.

Major commodities saw mixed performance: Gold climbed to US\$3,323.5 (up 1.1% MTD, 26.6% YTD), crude oil dipped to US\$62.3 (down 0.4% daily, 13.1% YTD), and crude palm oil traded at 3,905.0 (up 0.3% daily, down 4.4% YTD). The Baltic Dry Index remained positive YTD at 34.4%.

Idea of the Day: Hongkong Land (HKL) – Steady Execution on Strategic Vision 2035

Hongkong Land (US\$5.23, down 2 cents) issued its Q1 2025 Interim Management Statement, highlighting ongoing progress on its Strategic Vision 2035, which targets the development of ultrapremium integrated commercial assets in Asia’s gateway cities. A critical component of this strategy is the recycling of up to US\$10 billion in capital over ten years to fuel new investments and boost shareholder returns.

• First landmark capital recycling deal: Sold office floors and selected retail space at One Exchange Square to HKEX for HK\$6.3 billion (US\$810 million), with proceeds received over the next 18 months.
• This transaction secures HKEX’s permanent headquarters in the Central Portfolio and has enabled HKL to reach 30% of its US\$4 billion capital recycling target by end-2027.
• Initiated a US\$200 million share buyback program through December 2025, funded by transaction proceeds and other recycling initiatives.
• Q1 underlying profit was stable compared to the previous year, with lower Central Portfolio contributions offset by a stronger build-to-sell segment, primarily in mainland China.
• Net debt reduced to US\$4.9 billion as of 31 March 2025; net gearing at 16%; committed liquidity stood at US\$3.2 billion, with 68% of debt at fixed rates.
• Central office portfolio saw improved leasing momentum; physical vacancy at 8.3%, committed basis vacancy at 7.3%, while the overall Central Grade A office market vacancy was 11.5%.
• LANDMARK retail portfolio in Hong Kong reported lower contributions due to ongoing renovations, with vacancy rising to 4.5% (from 3% at end-2024).
• Build-to-sell business focus: Attributable contracted sales in Q1 were US\$190 million (China) and US\$307 million (Singapore). The group is accelerating capital returns from this segment.
• 2025 full-year underlying earnings guidance remains unchanged. However, contributions from Central Portfolio expected lower, with up to 40% of LANDMARK’s leasable floor under renovation.

Valuation: HKL has a market cap of US\$11.6 billion, trading at 17.5x forward P/E and 0.4x P/B, with a 4.4% dividend yield. The low P/B, supported yield, and ongoing buybacks underpin share price. Successful asset monetization could prompt special dividends, offering further share price catalysts. Recommendation: Accumulate.

Metro Holdings: Challenging Year Amid China Property Headwinds

Metro Holdings (\$0.415, up \$0.01), a property investment and development group, reported a loss after tax of S\$224.7 million for FY2025 (ending 31 March 2025), reversing from a S\$14.6 million profit in FY2024. The loss stemmed mainly from non-cash fair value and impairment losses tied to China real estate exposure.

• Losses included S\$105.4 million share of loss from 20.5%-owned associate Top Spring International, S\$91.1 million in fair value losses (China properties via associates/JVs), and S\$32.9 million impairment from amounts due from associates.
• Additional fair value losses of S\$23.2 million from MGSA investment, offset partially by S\$14.9 million share of net operating profit and S\$11.5 million fair value gains (UK, Australia, Singapore), and S\$7.2 million negative goodwill from acquiring 25% more in Fairbriar.
• The Retail Division posted a S\$6.9 million loss (vs. S\$1.8 million profit in FY2024), due to lower revenue, gross margins, and impairment on Singapore retail assets.
• Group revenue fell to S\$104.5 million (from S\$115.9 million), led by S\$8.9 million decrease in retail, and S\$2 million drop from Indonesian residential development sales.
• Property Division revenue down to S\$8.0 million, with a segment loss of S\$1.2 million (vs. S\$11.7 million profit), attributed to lower gross profit and net income, particularly a S\$10.1 million increase in net fair value loss from MGSA.
• Average occupancy for four investment properties slipped to 78.4% (from 84.5%). Share of results from associates (excluding negative goodwill and impairment) saw a loss of S\$170.4 million, nearly five times more than FY2024’s loss of S\$34.4 million.
• Losses were driven by higher losses from Top Spring (+S\$72.8 million), Bay Valley (+S\$42.8 million), Shanghai Plaza (+S\$23.6 million fair value loss, +S\$10.7 million operating loss).

Strategic Response: Metro is prioritizing capital discipline, preserving cash, optimizing liquidity, and deferring non-essential capex. The company continues to maintain a strong liquidity position and is actively managing its portfolio for enhanced shareholder value.

Valuation: Metro trades at 0.3x P/B (NAV: \$1.40/share), with a 4.8% dividend yield. Capitalization is \$345 million. Despite weak fundamentals and no analyst coverage, the low P/B and decent yield justify a Hold rating.

Sector Highlights: Top Dividend, Value, and Growth Plays

Starbucks China: Exploring Strategic Options Amid Intensifying Competition

Starbucks is in discussions with private equity, technology firms, and other potential partners regarding its China business, including a possible stake sale. China, Starbucks’ second-largest market, generated US\$740 million in net revenue in the March quarter (vs. Luckin Coffee’s US\$1.2 billion). The company is evaluating feedback and may opt not to proceed with a deal. Starbucks remains committed to the Chinese market for long-term growth and is open to partnerships to realize this potential.

Macroeconomic Outlook: Defensive Posture Amid Uncertainty

April’s ISM Services data in the US surprised to the upside, but underlying components signal mixed momentum and rising price pressures. Employment contracted, supplier delivery times lengthened, and the April Services ISM indicated stagflationary pressures. These factors point to a likely prolonged restrictive Fed policy.

• Trade tensions escalate with 100% tariffs on foreign films, expanding the trade war’s reach.
• Inflation and policy volatility have led to a defensive allocation: underweight equities and credit, overweight government bonds (prefer shorter duration), and an upgrade for Bitcoin as a potential safe-haven asset.
• US assets offer little risk premia, with foreign investors beginning to divest due to political and trade policy uncertainty.

Share Transactions and Corporate Actions: Notable Moves

Ongoing share buybacks were reported for companies such as HK Land (480,000 shares at US\$5.21), APAC Realty, Olam, SGX, UOB, DBS, and others, with cumulative purchases ranging from 0.1% to over 10% of mandates.

Institutional and Retail Fund Flows: Sector and Stock Trends

For the week of 12 May 2025, institutional investors were net sellers (-S\$47.9m), while retail investors were net buyers (+S\$56.3m).

Retail investors showed strong net buying in ST Engineering, SGX, Thai Beverage, Singtel, and OCBC. At the sector level, institutions shifted between net buys and sells across weeks, with notable net selling in REITs and selective buying in technology, financials, and consumer cyclicals.

Dividend Calendar: Upcoming Key Corporate Actions

SGX Watch-List: Companies Under Review

32 companies are currently on the SGX Watch-List, including recent additions such as Addvalue Technologies, Renaissance United, Telechoice, Tiong Seng Holdings, Global Invacom Group, Green Build Technology, Keong Hong, and Camsing Healthcare. These companies are flagged for various compliance or operational concerns, with entry dates ranging from June 2017 to June 2024.

Conclusion: Navigating Opportunities Amid Market Volatility

The Singapore equity market continues to offer pockets of value, especially among selected property and banking stocks with attractive P/B valuations and dividend yields. However, ongoing macroeconomic uncertainty, defensive global allocations, and sectoral challenges—especially in China’s property sector—demand prudent stock selection and risk management. Investors are advised to remain vigilant, monitor fund flows, and watch for catalysts from capital recycling, corporate actions, and strategic business reviews.