Broker: Lim & Tan Securities
Date of Report: 25 July 2025

Singapore Market Outlook: Keppel DC REIT Shines Amid Robust Data Centre Demand, Suntec REIT Delivers Stable Returns, and CosmoSteel Offer Nears Completion

Market Overview: Key Indices, Commodities, and Interest Rates

The Singapore market remains buoyant, with the FSSTI Index closing at 4,231.3, marking gains of 0.5% for the day, 6.7% month-to-date, and an impressive 11.7% year-to-date. Global indices saw mixed performances—Nikkei surged 3.5%, Hang Seng climbed 1.6%, while the Dow Jones dipped 0.7%. The VIX volatility index fell 6.8% for the day, suggesting a calmer market environment.

Commodity markets also recorded notable moves: Gold was up 0.1% at \$3,390.5 (up 29.2% YTD), while crude oil inched up 0.2% but remains down 7.5% YTD. The Baltic Dry Index stands out, surging 104.1% YTD to 2,035.

Keppel DC REIT: Riding the Data Centre Wave

Keppel DC REIT (\$2.26, down 0.02) delivered a stellar performance for the first half ended 30 June 2025. The REIT reported distributable income (DI) of \$127.1 million, a 57.2% year-on-year jump, powered by the acquisition of Keppel DC Singapore 7 & 8 and Tokyo Data Centre 1, along with robust contract renewals and escalations. This growth was partially offset by asset divestments and the absence of a one-off dispute settlement sum from 2024.

• DPU Growth: Distribution per Unit (DPU) for 1H 2025 rose 12.8% year-on-year to 5.133 cents, despite a larger unit base post-equity fundraise in 4Q 2024.
• Yield: Based on the 30 June 2025 closing price of \$2.33, the annualized distribution yield is 4.41%. The 1H 2025 DPU will be paid on 15 September 2025.
• Portfolio Metrics:
  • Portfolio reversion: ~51% in 1H 2025
  • Occupancy: 95.8%
  • Weighted Average Lease Expiry (WALE): 6.9 years
• Strategic Moves:
  • Divested Kelsterbach Data Centre in March 2025; Basis Bay Data Centre (Malaysia) divestment to complete by 3Q 2025
  • Ongoing portfolio review for unlocking value and repositioning
• Financial Health:
  • Aggregate leverage: 30.0%
  • Average cost of debt: 3.0% (down from a year ago)
  • Total borrowings: \$1.6 billion (76% hedged via interest rate swaps)
  • Interest coverage: 5.9x

The global data centre sector is anticipated to grow rapidly, driven by surging demand for generative AI and digitalization. McKinsey & Co. forecasts a 19–22% CAGR in global data centre demand from 2023 to 2030, with 70% of workloads expected to be AI-related. The Asia-Pacific region faces a persistent supply-demand imbalance, supporting strong fundamentals for Keppel DC REIT.

Keppel DC REIT’s market cap is S\$5.1 billion, trading at 1.4x price-to-book with a 4.5% annualized dividend yield. The consensus target price is S\$2.46, implying a potential 9.3% upside. Despite a robust outlook, its yield is relatively lower compared to certain peers, so the recommendation is to “Accumulate on Weakness.”

CosmoSteel Holdings: Final Offer Nears Completion

3HA Capital Pte. Ltd. has tabled a final offer of S\$0.25 per share for CosmoSteel Holdings (unchanged), representing a 25% premium over the initial S\$0.20 offer in May 2025. The offer was declared unconditional on 7 July 2025, with valid acceptances received for nearly 229 million shares (87.88% of total voting rights). The offer closes at 5:30pm, 28 July 2025.

• If acceptances reach 90%, the Offeror may compulsorily acquire the remaining shares.
• Shareholders who previously accepted the S\$0.20 offer will automatically receive the enhanced S\$0.25 offer.
• As of last night, the Offeror owns 88.62% of the company.
• The offer represents a minor discount to CosmoSteel’s NAV of 29-30 cents, much narrower than other steel stockists.
• Advice: Minority shareholders are recommended to accept the offer and consider reallocating proceeds to cheaper steel stockists.

Suntec REIT: Stable Performance with Attractive Yield

Suntec REIT (\$1.18, up 0.01) posted a 4.6% increase in distributable income to \$92.8 million for 1H 2025, with DPU rising 3.7% year-on-year to 3.155 cents.

• Singapore Portfolio: Strong operational performance, stable office occupancy, and robust rent reversions. High committed office occupancy is expected to persist, underpinned by Singapore’s status as a stable, attractive business hub.
• Suntec City Mall: Retail sales remain pressured by cautious consumer spending. However, committed occupancy is expected to stay above 95%, supported by recovering tourism and MICE events. Rent reversions for FY25 may moderate but remain positive.
• Suntec Convention: Stable performance expected as Singapore continues attracting new events. Focus remains on higher-yielding and public sector events, with some tightening of event budgets due to weaker business sentiment.
• Australia Portfolio: Melbourne and Adelaide CBDs face high vacancy and incentives (40–45%). 55 Currie Street in Adelaide faces occupancy pressure, but Sydney and Melbourne assets remain healthy.
• UK Portfolio: Market demand in Central London is strong for new builds and large spaces; however, market volatility affects office space decisions. Portfolio performance is expected to remain underpinned by healthy occupancy.

At \$1.18, Suntec REIT trades at 0.6x book, offers a 5.3% yield (on an estimated 6.3 cents DPU), and has a consensus 1-year target price of \$1.22, indicating limited upside but strong yield support. The recommendation is to HOLD given current fair valuations and stable income profile.

Singapore Market’s Top Dividend and Value Opportunities

Macro Market News: US and China/Indonesia Developments

US: Inflation pressures driven by tariffs appear to have peaked, with the prices paid component flat and fewer firms reporting deteriorating delivery times. Contained inflation supports a favorable view on US fixed income duration as global activity remains sluggish and inflation is limited largely to the US.

China/Indonesia: Chinese capital is fueling Indonesia’s ambitious rise in the aluminium industry, mirroring earlier nickel sector successes. With three new alumina refineries starting this year and more to come, Indonesia is poised to become a top global producer. Chinese firms are rapidly deploying capital and technology, seeking to diversify supply chains. Indonesia’s aluminium capacity is projected to rise more than fivefold by 2027, potentially shaking up global markets.

Share Transactions: Notable Acquisitions, Disposals, and Buybacks (1–24 July 2025)

* Bought from 2 Jan–17 June 2025

Share Buybacks

Notable buybacks include: DBS (350,000 shares at \$46.18), UOB (200,000 shares at \$37.00), OCBC (300,000 shares at \$16.11), Olam (250,000 shares at \$0.99), and others across various listed names. Buyback activity reflects management confidence and supports share prices.

Institutional and Retail Fund Flows: Sector and Stock Trends

For the week of 7 July 2025, institutional investors recorded net buys of S\$87.3 million (down from S\$213.3 million the previous week), while retail investors posted net sales of S\$325.5 million.

Top 10 Institutional Net Buy Stocks (S\$M)

• Singtel 106.0
• SIA 20.4
• OCBC 19.9
• Keppel 18.3
• Yangzijiang Shipbuilding 12.7

Top 10 Institutional Net Sell Stocks (S\$M)

• DBS (37.3)
• PSC Corporation (25.4)
• Keppel DC REIT (20.2)
• UOB (17.4)
• ComfortDelGro (12.5)

Top 10 Retail Net Buy Stocks (S\$M)

• PSC Corporation 25.4
• Mapletree Industrial Trust 24.1
• Keppel DC REIT 24.0
• ComfortDelGro 13.6
• Frasers Centrepoint Trust 12.4

Top 10 Retail Net Sell Stocks (S\$M)

• DBS (118.0)
• SIA (70.4)
• Singtel (62.9)
• OCBC (58.8)
• UOB (42.6)

Dividend Announcements: Key Ex-Dates and Payouts

SGX Watch-List: Companies Under Surveillance

A total of 32 companies are currently under 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. Long-standing entries include CosmoSteel, British And Malayan Holdings, and Full Apex (Holdings).

What’s Ahead: Earnings and Ex-Dividend Calendar

A comprehensive calendar spanning July and August 2025 details reporting dates for leading companies across various sectors. Notable upcoming results are expected from Digital Core REIT, OUE REIT, Mapletree Logistics Trust, Suntec REIT, Keppel DC REIT, SIA, Mapletree Industrial Trust, Keppel REIT, Capland Ascott Trust, UOB, DBS, Genting, SGX, Wilmar, and many others.

Conclusion: Resilient Market, Sector Leaders, and Forward Opportunities

The Singapore market continues to demonstrate resilience, supported by strong sector performances, robust institutional flows in select blue chips, and healthy dividend yields. Keppel DC REIT leads the charge with high growth and portfolio quality, although yield-conscious investors may seek opportunities on pullbacks. Suntec REIT provides steady yield support, while CosmoSteel’s offer presents a timely liquidity event for shareholders.

As global macroeconomic dynamics evolve, with Asia-Pacific at the heart of commodity and technology trends, Singapore remains a focal point for regional investors seeking a blend of growth, yield, and stability.