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

Singapore REITs and Regional Market Outlook 2025: Top Picks, Sector Analysis, and Key Company Insights

Introduction: Positive Momentum for Singapore REITs Amid Easing Rates

The outlook for Singapore’s Real Estate Investment Trusts (REITs) remains positive, underpinned by descending SGD interest rates and expectations of resilient economic growth in 2025. Despite uncertainties arising from tariffs, capital management strategies, and ongoing portfolio reconstitution, investor positioning in SREITs is currently light, offering significant room for sector rotation.
Key sector picks include:

• 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 REITs: Investor Opportunities and Sector Dynamics

Management teams in the REIT space are actively addressing tariff impacts and focusing on portfolio reconstitution to adapt to sectoral changes. Capital management remains a priority as companies position themselves for continued volatility. With investors currently underexposed to the sector, there is ample opportunity for rotation, especially as SGD interest rates decline and economic growth remains on track. The sector’s reasonable valuations further strengthen the investment case.

Singapore’s Economic Backdrop: Manufacturing Strength and Banking Caution

Manufacturing Surge Boosts Economic Outlook

– April’s manufacturing growth reached a 3-month high, driven by US buyers frontloading purchasing during a 90-day tariff moratorium. – The US-China trade truce is expected to sustain demand into Q3, affirming a GDP growth forecast of 2.4% for 2025, ahead of official government guidance. – Sectoral strengths were observed in electronics and transport engineering, while general manufacturing, chemicals, and biomedical segments declined.

Banks Face Decelerating Loan Growth

– April 2025 MAS data shows total loan growth decelerating to 3.4% YoY, the lowest for the year. – Local banks are expected to maintain this low single-digit trend throughout 2025, with corporate and SME caution likely to persist. – Hold ratings are maintained for DBS, UOB, and OCBC, reflecting limited upside amid macro uncertainty.

ASEAN Equity Strategy: Navigating Tariff Uncertainty and Market Rotation

The ASEAN Equity Strategy maintains overweight positions in Singapore (SG), Malaysia (MY), and Indonesia (ID), supported by:

• Domestic resilience
• Capital returns
• AI-driven growth (SCI, STE, CICT, ST)
• Investment upcycle in Malaysia (PBK, GAM, ECW, ITMAX)
• Rate-sensitive banks and developers in Indonesia (BBCA, BRIS, PWON, CTRA)

Vietnam is poised for outperformance if tariff negotiations succeed, with preferred sectors including infrastructure (VHM, HPG, ACV), banks (TCB, MBB), and consumer (MWG).

Company Analysis: Key Sector and Stock Insights

CapitaLand Ascendas REIT (CLAR): Expanding Singapore Footprint

– Announced the acquisition of a data centre and business park for SGD724.6 million. – Assets are modern, well-located, and anchored by tech tenants, reinforcing CLAR’s presence in Singapore’s strategic sectors. – Financing structure: SGD500 million equity and SGD275 million debt. – Pro-forma dividend accretion: 1.36%; NAV accretion: 3.5%; gearing remains stable. – Diversified portfolio, value-added manufacturing/R&D exposure, and strong credit underpin a maintained BUY recommendation.

IHH Healthcare: Sustained Growth and Expansion

– 1Q25 results in line with expectations, showcasing stable revenue growth and EBITDA margins across all core segments. – Expansion strategy is well-executed, especially in Malaysia and India. – Near-term catalysts include added bed capacity and completion of refurbishments at Singapore’s Mt Elizabeth Hospital, with EBITDA recovery expected in late 2025. – BUY maintained with SOTP-TP of MYR7.97, reflecting confidence in organic and opportunistic inorganic growth.

Netlink NBN Trust: Stable Operations with Dividend Upside

– FY25 earnings declined 6% YoY due to lower revenue and EBITDA (each down 1% YoY). – RAB revenue stabilizing as rising connections offset regulatory price cuts effective April 2024. – Declared final DPU of SGD2.68 cents (SGD5.36c for the full year), up 1% YoY and ahead of consensus. – FY25 yield stands at an attractive 6%, with dividends viewed as highly sustainable.

AMMB Holdings: Results Align with Expectations

– FY25 results matched expectations; FY26/27E earnings forecast recently cut by 4-5% to reflect slower economic growth and a 25bp rate cut in 2H25. – Target price maintained at MYR6.05 (CY25E PBV of 0.9x, COE: 9.9%, g: 4%, ROE: 9.6%). – Remains among top sector picks.

ISOTeam: Anticipating New Contract Wins Post-Election

– With the Singapore election concluded, HDB public project tender results are expected soon, with probable order wins of SGD20-30 million. – As of 1HFY25, the order book stands at SGD188.7 million. – Drone-testing is expected to commence at several HDB BTO sites. – BUY maintained, TP unchanged at SGD0.104 (9x blended FY25/26E P/E).

Singtel: Elevated Capital Returns and Narrowing Holdco Discount

– FY25 results highlight strong execution; capital return is a key driver. – BUY reiterated with increased TP of SGD4.30, reflecting a narrowing Holdco discount (20%). – Despite earnings adjustments for Airtel/Intouch, core operations and key associates (Optus, NCS, Airtel, AIS) show strong momentum. – Expect capital returns via buybacks/dividends to remain high.

First Resources: Tactical Upgrade to BUY Following Strong 1Q

– 1Q25 PATMI reached USD63 million (+75% YoY), meeting 29% of Maybank/26% of consensus FY25E estimates. – Strong performance driven by higher ASPs, sales volume, and better FFB nucleus output (+12% YoY), despite an 18,000t inventory build-up. – Fertilizer application on track at ~25% of annual plan. – Downstream margins positive, supported by high glycerin prices from biodiesel. – Biodiesel capacity nearly tripled to 700,000 tpa from Jan 2025, aiding compliance with government B40 mandate. – Forecast: 20% YoY FFB nucleus output growth for FY25E, including contribution from ANJ acquisition (91.2% acquired for USD330m; offer extended for remaining 8.8%). – Indonesian government increased CPO export levy to 10% from 7.5% effective 17 May, expected to lower net CPO ASP. – FY25E-27E EPS trimmed by 3-4%, but upgraded to tactical BUY with new TP SGD1.57 (9x FY25 PER, -0.75SD of 6Y mean). – Potential EPS upside if cost optimization and loss-making asset disposals at ANJ are realized.

Industry and Regulatory Updates

• Corporate Governance Review: The Corporate Governance Advisory Committee, established by MAS, will review the industry code to enhance governance and boost Singapore’s equities market. This complements ongoing efforts by the Equities Market Review Group.
• Keppel Leadership Appointment: Former DBS CEO Piyush Gupta appointed as Keppel’s deputy chairman and non-executive independent director from July 1, joining key board committees.
• Acrophyte Hospitality Trust: Undergoing strategic review and evaluating options for its stapled securities in light of upcoming capital expenditure for portfolio enhancement.

Singapore Economics: Manufacturing Frontloading and Outlook

– April manufacturing surged by +5.9%, led by electronics and transport engineering. – Sequential growth in April hit a 3-month high, bolstered by US demand ahead of tariff deadlines. – March GDP data revisions suggest first-quarter growth could be revised up by 0.1 percentage point to 4%. – Manufacturing and exports expected to remain strong in 2Q, with potential for a pullback in the second half. – MAS likely to maintain its appreciation stance in July.

Financial Tables and Key Figures

Conclusion: Navigating 2025 with Strategic Picks and Sector Insight

Singapore’s equity market, especially REITs, is well-positioned for outperformance as interest rates fall and economic growth remains robust. Across the region, select opportunities in healthcare, property, banking, and emerging ASEAN markets provide tactical and strategic value. Investors are encouraged to consider these sector insights and company-specific catalysts as they navigate the evolving regional landscape in 2025.