Broker: Lim & Tan Securities
Date of Report: 29 July 2025

Singapore Market Outlook: SIA Earnings, REITs, Biotech Boom, and Institutional Fund Flows – Comprehensive Analysis

Market Overview: STI Performance and Global Indices

The Singapore Straits Times Index (FSSTI) closed at 4,241.1, down 0.5% for the day but up 7.0% month-to-date and 12.0% year-to-date. Other major indices posted mixed results, with the Dow Jones at 45,019.0 (+5.5% YTD), S&P 500 at 6,428.3 (+6.3% YTD), and Nasdaq at 23,535.5 (+8.6% YTD). Hong Kong’s HSI stood out with a stellar 27.4% YTD gain, while the UKX and SHCOMP also saw double-digit growth.

Daily market value on SGX stood at S\$1,415.4 million with a volume of 2,001.8 million shares. The STI’s 52-week range was 3,198.4 to 4,274.3.

Key Interest Rates & Commodities Snapshot

• 3-Month SGD SORA: 1.9% (-39.5% YTD)
• SG 10-Year Bond Yield: 2.1% (-27.1% YTD)
• US 10-Year Bond Yield: 4.4% (-3.6% YTD)
• Gold: S\$3,310.6/oz (+26.1% YTD)
• Crude Oil: S\$66.7/barrel (-7.0% YTD)
• Baltic Dry Index: 2,257.0 (+126.4% YTD)
• Crude Palm Oil: S\$4,242.0/tonne (+3.8% YTD)

Singapore Airlines: Record Passengers, Rising Costs, and a “Hold” Outlook

Singapore Airlines (SIA) (S\$7.60, +3 cents) reported group revenue of S\$4,790 million for the quarter ending 30 June 2025, up S\$72 million (+1.5%) year-on-year. Despite economic and geopolitical uncertainties, demand for air travel and cargo remained robust.

• SIA and Scoot carried a record 10.3 million passengers (+6.9% YoY).
• Group passenger load factor improved to 87.6% (+0.7 ppt), as traffic growth (+4.1%) outpaced capacity expansion (+3.3%).
• Passenger yields slipped 2.9% to 10.0 cents per RPK due to increased competition.
• Cargo revenue fell S\$10 million (-1.9%) with yields declining 4.4%. Cargo load factor dropped 0.8 ppt to 56.9% as capacity growth outpaced demand.
• Group expenditure surged S\$138 million (+3.2%) to S\$4,386 million, driven by higher non-fuel costs (+S\$246 million; +8.5%) and inflationary pressures. Notably, net fuel cost fell 7.9% (-S\$108 million) due to a 16.9% slump in fuel prices, partially offset by increased uplift and a hedging loss (+S\$109 million).
• Operating profit for the quarter was S\$405 million, down S\$65 million (-13.8%) year-on-year.
• Net profit slid S\$266 million (-58.8%) to S\$186 million, attributed to lower operating profit, lower interest income (-S\$61 million), and losses from associated companies (notably Air India, now equity-accounted).
• Shareholder equity as of 30 June 2025 stood at S\$15.8 billion (+S\$0.1 billion QoQ). Total debt fell S\$1.4 billion to S\$11.5 billion (debt-equity ratio: 0.73).
• Convertible bonds: S\$235 million converted in the quarter (48 million shares at S\$4.8945); S\$615 million remain outstanding.
• Cash & bank balances: Down S\$0.5 billion to S\$7.8 billion, driven by S\$0.8 billion debt repayment and S\$0.4 billion capex; S\$1.2 billion of net operating cash generated; S\$3.3 billion in undrawn credit lines available.

Valuation & Outlook: SIA is capitalized at S\$22.5 billion, trading at 16.1x forward P/E, 1.2x P/B, and a 5.3% indicative dividend yield. With consensus target price at S\$6.85 (10% downside), SIA faces challenges from the likely end of the post-COVID travel boom and increasing operating costs. Most analysts recommend “Hold,” citing limited year-on-year growth potential.

CapitaLand Ascott Trust (CLAS): Consistent Growth and Portfolio Enhancement

CapitaLand Ascott Trust (CLAS) (S\$0.905, -0.5 cents) delivered a 6% YoY increase in gross profit to S\$182.5 million for 1H 2025, with revenue up 3% to S\$398.5 million. This growth was attributed to stronger operational performance, a successful portfolio reconstitution strategy, and asset enhancement initiatives (AEIs).

• Same-store gross profit and revenue grew 4% YoY.
• Revenue per available unit (REVPAU) for 1H 2025 rose 3% to S\$150; 2Q 2025 REVPAU was S\$159 (+3% YoY), driven by higher average occupancy rates.
• Core distribution for 1H 2025 increased 1% YoY to S\$91.6 million. Total distribution was S\$96.5 million. Core DPS and DPS remained stable at 2.40 and 2.53 cents, respectively.
• 66% of 1H 2025 gross profit derived from stable income sources (16% from living sector assets); 34% from growth income sources.

Portfolio Strategy & Enhancements:

• Three additional AEIs planned for 2025-2026, raising total to five. Successfully completed AEI for ibis Ambassador Seoul Insadong in 1H 2025.
• Total capital expenditure for four remaining AEIs: S\$205 million, with S\$145 million invested by CLAS, the rest funded by master lessees/operators.
• AEIs target properties in key gateway cities such as Paris, Osaka, London, and Sydney, aiming to enhance value, demand capture, and profitability.
• Redeployed divestment proceeds to acquire two freehold limited-service hotels in Japan (ibis Styles Tokyo Ginza, Chisun Budget Kanazawa Ekimae) for JPY21 billion (S\$178.5 million), with a DPS accretion of 1.6%—more than replacing income from four divested Japanese properties.
• Somerset Clarke Quay (Singapore) redevelopment—completion in 2026, operations to start in 2027.

Balance Sheet & Valuation:

• Gearing at 39.6% (well below MAS limit of 50%).
• Fixed-rate borrowings increased to 82% (from 76%).
• Average cost of debt: 2.9% per annum, with weighted average debt maturity of 3.4 years and interest cover of 3.1x.
• Cash and available credit facilities: S\$1.46 billion.
• Market cap: S\$3.4 billion. Forward dividend yield: 6.7%. Price-to-book: 0.8x.
• 1H 2025 DPU: 2.53 cents, stable YoY.
• Consensus target price: S\$1.11 (22% upside potential). “Accumulate” rating maintained, citing attractive valuation, strong recycling initiatives, and global tourism recovery tailwinds.

Biotech Innovation: China’s Ascendancy and Global Implications

China’s biotech sector is undergoing a transformation, rapidly catching up with the US in innovative drug development. In 2024, over 1,250 novel drugs entered development in China, nearing the US’s 1,440 and far surpassing the European Union. The scale and quality of Chinese biotech innovation have attracted global attention, with regulatory agencies like the US FDA and European Medicines Agency increasingly granting expedited review status to Chinese-origin drugs.

• China now slightly surpasses the EU in expedited drug reviews, a major shift from its previous reputation for generics and low-quality products.
• Legend Biotech’s cell therapy, developed in China and marketed by Johnson & Johnson, has outperformed US-originated therapies in some respects.
• China’s biotech boom accelerated after regulatory reforms in 2015, improving standards and transparency, and driven by the government’s “Made in China 2025” strategy and massive investments in biotech talent and infrastructure.

Fund Flow Analysis: Institutional and Retail Activity

During the week of 21 July 2025, institutional investors recorded net buys of S\$335.4 million (vs. S\$122.3 million a week earlier), while retail investors posted net sales of S\$159.6 million (vs. S\$371.1 million net sales previously).

Sector flows showed institutional buying in financials (+S\$178.5m), industrials (+S\$194.2m), and consumer cyclicals (+S\$26.5m), while REITs (-S\$45.2m), telcos (-S\$55.8m), and technology hardware/software (+S\$19.9m) saw more nuanced moves.

Company Highlights: Highest Yields, Value Picks, and Share Transactions

Highest Consensus Forward Dividend Yields:

• Frasers Logistics Trust: 6.78%
• Mapletree Industrial Trust: 6.33%
• Mapletree Pan Asia Comm Trust: 6.20%
• DBS Bank: 6.19%
• Mapletree Logistics Trust: 6.00%

Lowest Consensus Forward P/E:

• Yangzijiang Shipbuilding: 7.71x
• Jardine Matheson: 9.84x
• Wilmar International: 10.42x
• Thai Beverage: 10.44x
• UOB Bank: 10.45x

Lowest Trailing P/B:

• Hongkong Land: 0.46x
• UOL Group: 0.51x
• Jardine Matheson: 0.58x
• City Developments: 0.65x
• Mapletree Pan Asia Comm Trust: 0.73x

Lowest Trailing EV/EBITDA:

• Yangzijiang Shipbuilding: 4.26x
• Genting Singapore: 5.72x
• DFI Retail Group: 6.84x
• Venture Corp: 9.10x
• Thai Beverage: 9.97x

Shareholder Transactions and Buybacks

Key acquisitions, disposals, and share buybacks included:

• ISO Team: Ginko AGT Global Growth Fund acquired 5,986,800 shares (5.24% stake).
• Indofood Agri Resources: PT Indofood Sukses Makmur Tbk acquired 9,056,200 shares (85.87% stake).
• Comfort Delgro: Silchester International LLP disposed 1,800,000 shares (6.94% stake).
• UOB: Bought back 200,000 shares at S\$37.00 each (12.8% of mandate used).
• DBS: Bought back 350,000 shares at S\$46.18 each (7.2% of max mandate used).

Upcoming Dividends and Key Corporate Dates

Numerous other companies across REITs, banks, and industrials have scheduled results and distributions over the coming weeks, including Mapletree Industrial Trust, Keppel DC REIT, and The Hour Glass.

SGX Watch-List: Companies Under Scrutiny

32 companies remain 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. Other longstanding names include Amos Group, British and Malayan Holdings, Cosmosteel, and Trek 2000 International.

Conclusion: Navigating a Fast-Evolving Landscape

The Singapore market remains dynamic, with blue-chip stalwarts like SIA and CLAS navigating post-pandemic normalization, while institutional flows highlight shifting sector preferences. The rise of China’s biotech industry signals global shifts in innovation and competitive advantage. Investors should monitor upcoming earnings, dividend announcements, and SGX Watch-List developments as the market adapts to new realities.