Broker: Maybank Research Pte Ltd
Date of Report: 2 June 2025

Singapore and ASEAN Market Outlook: S-REITs, Banks, and Key Stocks to Watch in 2025

Overview: Optimistic Sector Rotation Amidst Declining Rates and Economic Resilience

Singapore’s equity markets are poised for opportunity as investor positioning in REITs remains light, opening the door for sector rotation amid falling SGD interest rates and an optimistic growth outlook. Maybank Research maintains a positive stance on Singapore REITs, with top picks including CICT, CLAR, CLAS, FCT, MLT, MPACT, and PREIT. Key themes include tariff uncertainty, capital management strategies, and ongoing portfolio reconstitution. Robust manufacturing data and a resilient economic backdrop underscore the case for selective exposure, while cautious corporate sentiment tempers the outlook for banks.

Singapore REITs: Room for Rotation as Interest Rates Fall

– Investor engagement reveals heightened concerns about tariff impacts, portfolio reconstitution, and active capital management. – Investor allocations to the S-REIT sector remain light, indicating significant upside potential as falling SGD rates support valuations. – Economic growth outlook remains bright, with Maybank’s macro team forecasting 2025 GDP at 2.4%, above government guidance. – Top S-REIT picks:

• CapitaLand Integrated Commercial Trust (CICT)
• CapitaLand Ascendas REIT (CLAR)
• CapitaLand Ascott Trust (CLAS)
• Frasers Centrepoint Trust (FCT)
• Mapletree Logistics Trust (MLT)
• Mapletree Pan Asia Commercial Trust (MPACT)
• Parkway Life REIT (PREIT)

Singapore Macro Trends: Manufacturing Surge, Caution in Lending

– April 2025 manufacturing growth surged to a three-month high, driven by US buyers frontloading orders during a 90-day tariff moratorium. – Electronics and transport engineering led the gains, while general manufacturing, chemicals, and biomedical sectors saw declines. – Upward revision of March data suggests first-quarter GDP growth could be nudged higher, possibly revising to 4%. – Despite manufacturing strength, April banking loan growth decelerated to +3.4% YoY, the lowest for 2025, signaling caution among corporates and SMEs. – Loan growth is expected to remain in the low single digits throughout 2025. – Maintain HOLD on Singapore banks: DBS, UOB, OCBC.

ASEAN Equity Strategy: Regional Resilience and Thematic Opportunities

– Maybank maintains overweight calls on Singapore, Malaysia, and Indonesia. – Singapore: Focus on domestic resilience, capital returns, and AI exposure. Stocks: SCI, STE, CICT, ST. – Malaysia: Supported by broad investment upcycle. Stocks: PBK, GAM, ECW, ITMAX. – Indonesia: Rate-sensitive banks (BBCA, BRIS) and developers (PWON, CTRA) remain attractive. – Vietnam: Tariff negotiation success could extend outperformance. Prefer infrastructure (VHM, HPG, ACV), banks (TCB, MBB), and consumer stocks (MWG).

CapitaLand Ascendas REIT (CLAR): Strategic Acquisitions Enhance Singapore Footprint

– Announced acquisition of a data centre and business park for SGD724.6 million. – Modern assets located in tech-driven districts, deepening exposure to Singapore’s strategic sectors. – Deal financed with SGD500 million equity and SGD275 million debt. – Pro-forma accretion: Dividend +1.36%, NAV +3.5%; gearing remains largely unchanged. – Maintain BUY due to CLAR’s diversified portfolio, exposure to value-added manufacturing/R&D, and strong credit metrics.

IHH Healthcare: Robust Execution and Expansion Drive Optimism

– 1Q25 results met expectations with stable revenue growth and EBITDA margins. – Execution on expansion strategy in Malaysia and India is bearing fruit, with bed capacity set to rise. – Singapore’s Mt Elizabeth Hospital refurbishment concludes late 2025, spurring expected EBITDA recovery. – Company navigates geopolitical, structural, and regulatory challenges with focus on organic and opportunistic inorganic growth. – Maintain BUY with SOTP target price of MYR7.97.

Singapore Banks: Loan Growth Deceleration Signals Uncertainty

– April 2025 loan growth slowed to +3.4% YoY, the lowest for the year. – Trend expected to persist, with all three local banks (DBS, UOB, OCBC) likely to maintain low single-digit growth. – Macro uncertainty from tariffs keeps upside visibility limited. – Maintain NEUTRAL sector rating.

Corporate News and Governance Developments

– Industry code under review by the Corporate Governance Advisory Committee to enhance corporate governance and boost Singapore’s equities market. – Keppel appoints former DBS CEO Piyush Gupta as deputy chairman and non-executive independent director, effective July 1. – Acrophyte Hospitality Trust undergoes strategic review, exploring potential transactions involving stapled securities due to ongoing asset enhancement needs.

Other Key Stocks and Sector Outlook

• AMMB Holdings: FY25 results within expectations. Forecasts unchanged after previously cutting FY26/27E earnings by 4-5%. Target price: MYR6.05. Remains a top pick.
• Netlink NBN Trust: FY25 earnings down 6% YoY, slightly missing street expectations. However, final dividend beat consensus, with a full-year yield of 6%. RAB revenue stabilizing and dividend sustainability remains high.
• ISOTeam: With Singapore’s election over, more HDB project tenders are expected soon, with anticipated order wins of SGD20-30 million. Order book at SGD188.7 million as of 1HFY25. Drone-testing for HDB BTO sites upcoming. Maintain BUY with TP SGD0.104.
• Singtel: FY25 results confirm strong execution and capital return is a key driver. Raised target price to SGD4.30, reflecting a narrowing Holdco discount (20%). Buybacks and dividends expected to continue. Maintain BUY.

First Resources: Tactical Upgrade to BUY on Strong Results and Strategic Expansion

– 1Q25 PATMI: USD63 million (+75% YoY), beating expectations (29%/26% of FY25E Street/consensus). – Results driven by higher ASPs, sales volume, and strong FFB nucleus output (+12% YoY). – Fertilizer application on track at ~25% of annual plan; downstream margins positive due to strong biodiesel by-product pricing. – Biodiesel capacity nearly tripled from 250,000tpa to 700,000tpa as of Jan 2025, supporting delivery for B40 government mandate. – Acquired 91.2% of ANJ for USD330 million cash; offer to buy remaining 8.8% at same price, assuming 100% take-up for total outlay of USD362 million. – Indonesian government increased CPO export levies to 10% from 7.5% effective May 17, which may lower net CPO ASP domestically. – Trimmed FY25E-27E EPS by 3-4%. Upgraded to tactical BUY (from HOLD); new TP: SGD1.57 (from SGD1.69), based on 9x FY25 PER. – Further EPS upside possible if FR optimizes costs and disposes loss-making ANJ operations.

Upcoming Events and Dividends

– Upcoming corporate events in June include the ASEAN Corporate2U Series, featuring Thai companies Osotspa Plc and Humanica Plc. – Weekly picks, top insider activity, and dividend yield tables provided for investor monitoring.

Disclaimers and Analyst Certifications

– The report contains standard legal disclaimers, disclosures, and analyst independence certifications.

Table: Key Company Calls and Target Prices

Conclusion: Navigating 2025 with Selectivity and Sector Focus

As Singapore and ASEAN markets contend with tariff headwinds and capital management shifts, selectivity remains key. Falling interest rates, sector rotation opportunities, and robust corporate execution offer fertile ground for investors, particularly in S-REITs, select healthcare, and growth-driven companies. Cautious optimism is warranted for banks, while careful attention to regulatory and macroeconomic developments will be crucial for sustained performance throughout 2025.