Lim & Tan Securities
Date of Report: 8 July 2025

Singapore Market Insights: CAO’s Legal Win, NTT DC REIT’s Landmark IPO, and Key Investment Flows

Overview of Major Market Indices and Financial Markets

Singapore’s FSSTI Index closed at 4,031.9, marking a 0.5% increase for the day, 1.7% month-to-date, and a robust 6.4% year-to-date. Other global indices showed mixed performance, with the Dow Jones at 44,406.4 (-0.9% daily), S&P 500 at 6,230.0 (-0.8%), and the Hang Seng Index at 23,887.8 (-0.1%). Notably, the HSI is up 19.1% year-to-date.

Key interest rates reflected a dovish stance: the 3-month SGD SORA is at 2.0, and the Singapore 10-year bond yield is 2.1%. Commodities experienced mixed trends, with gold prices holding at 3,337.3 (+27.2% YTD), crude oil at 67.9 (-5.3% YTD), and crude palm oil at 4,063.0 (-0.6% YTD).

China Aviation Oil (Singapore): Legal Victory and Investment Thesis

China Aviation Oil (Singapore) Corporation Ltd (CAO) emerged victorious in a multi-year legal dispute with Banque De Commerce Et De Placements SA (BCP Dubai). On 7 July 2025, the Court of Appeal of Singapore dismissed BCP’s appeal in its entirety, upholding the previous High Court decision and awarding CAO S\$100,000 in costs. The core of the dispute was BCP’s claim that CAO’s representation regarding the existence and authenticity of original bills of lading was false. The Court sided with CAO’s interpretation, clarifying that the company’s representation referred only to the existence, authenticity, and validity of a set of 3/3 original bills of lading, not their endorsed form.

Investment Highlights:

• CAO’s net cash position stands at US\$500 million, representing 81% of its S\$787 million market cap.
• Forecasted net profit of US\$84–85 million for 2025 is significantly undervalued by investors.
• China’s government (51% owner) is expected to push for greater capital returns to shareholders.
• BP Plc, holding a 20% stake, is rationalizing non-core businesses, including its CAO stake.

Given its undemanding valuation, strong balance sheet, and potential corporate actions, CAO remains a top pick for 2025, with “Accumulate” maintained as the rating.

NTT DC REIT: Singapore’s Largest REIT IPO in Over a Decade

NTT DC REIT is set to launch the largest REIT IPO on the Singapore Exchange in more than ten years, aiming to raise US\$773 million (S\$988 million). The REIT will issue 1,030,209,500 units, with about 600 million offered to institutional and international investors at US\$1 per unit, and 30 million units to the Singapore public at S\$1.276 per unit.

Key Details:

• Cornerstone investors include GIC (committed to 100,880,000 units or 9.8% stake), AM Squared, Ghisallo Master Fund, Hazelview Securities, Pinpoint Asset Management (Singapore), UBS, and Viridian Asset Management.
• NTT, as sponsor, will subscribe to 25% of all units.
• Forecasted annualized DPU: 7.5 US cents (FY2026) and 7.8 US cents (FY2027), translating to forward yields of 7.5% and 7.8% based on the US\$1 IPO price.
• Initial portfolio: Six carrier-neutral, Tier III or Tier III-equivalent data center assets across the US, Austria, and Singapore (appraised at US\$1.572 billion, 90.7 MW IT load).
• Portfolio occupancy: 94.3% as of Dec 31, 2024, with a weighted average lease expiry of 4.8 years.
• 51% of base rent attributed to global cloud service providers and major tech giants.
• Built-in organic growth: 74.6% of contracts have fixed escalations averaging 3.3%.

The public offer opens July 7 at 9pm and closes July 10 at 12pm; trading commences July 14 at 2pm. With forward yields outperforming peers Keppel DC REIT (4.4%) and Digital Core REIT (6.8%), and strong backing from GIC and NTT, the recommendation is a strong “Subscribe”.

Sector and Stock Highlights: Dividend Yields and Valuations

These metrics highlight attractive opportunities for yield-seeking and value investors in Singapore’s blue-chip universe.

Macroeconomic Themes: US and China Market Trends

Recent US retail sales data missed expectations, with headline sales down 0.9% month-on-month. The labor market is losing momentum, and consumer spending is softening, reinforcing a defensive allocation stance. Analysts expect 25 basis point rate cuts in both September and December, recommending a long-duration stance in government bonds and favoring defensive over cyclical sectors.

China continues to internationalize its commodities trading, with the Shanghai Gold Exchange launching contracts and a vault in Hong Kong, denominated in yuan, to bolster its influence in global gold pricing and reduce reliance on the US dollar.

Share Transactions and Buybacks: Weekly Activity

Notable disposals included UOBKH (566,500 shares at S\$2.15) and Eneco Energy Ltd (100,000,000 shares at S\$0.011). Significant share buybacks were also observed in companies such as HK Land, Olam, UOB, OCBC, and DBS.

Fund Flow Analysis: Institutional and Retail Trends

For the week of 30 June 2025, institutional investors were net buyers with +S\$213.3 million, up from +S\$82.7 million previously. Retail investors were net sellers at -S\$304.7 million, compared to -S\$87.0 million a week ago.

Retail investors showed net buying in Yangzijiang Shipbuilding, Wilmar International, Mapletree Industrial Trust, and Frasers Centrepoint Trust, but net selling in DBS, CapitaLand Integrated Commercial Trust, and Keppel.

Upcoming Corporate Actions: Dividends and Earnings Calendar

SGX Watch-List: Companies Under Review

32 companies are currently under the SGX Watch-List, including Amos Group, Ascent Bridge Ltd, ASTI Holdings, British And Malayan Holdings, CH Offshore, Cosmosteel, Datapulse Technology, Debao Property, Eneco Energy, Full Apex (Holdings), GRP Limited, Interra Resources, Intraco Ltd, IPC Corp, Jadason Enterprises, Jasper Investments, Manufacturing Integration Technology, Metis Energy, Raffles Infrastructure, Shanghai Turbo, SMI Vantage, Trek 2000 Intl, United Food Holdings, USP Group Limited, Addvalue Technologies, Renaissance United, Telechoice, Tiong Seng Holdings, Global Invacom Group, Green Build Technology, Keong Hong, and Camsing Healthcare.

Conclusion

This report highlights a buoyant Singapore market with strong institutional inflows, a landmark REIT IPO, and strategic opportunities in undervalued blue-chip stocks like CAO. Investors should closely watch the data center REIT space, dividend-rich stocks, and evolving macro themes in both the US and China. The upcoming weeks offer a packed earnings and dividend calendar, providing numerous entry points for active investors.