Broker: OCBC Investment Research
Date of Report: 31 July 2025

Singapore and Global Markets: Key Earnings, Sector Developments, and Top Stock Insights – July 2025

Market Overview: Fed Holds Rates Amid Uncertainty, Global Economic Pulse Mixed

The US Federal Reserve maintained its key interest rate, aligning with market expectations. However, Chair Jerome Powell’s post-meeting comments dampened hopes for a September rate cut, as he cited persistent uncertainties including the impact of President Donald Trump’s tariff policy. Following the announcement, market expectations for a near-term rate cut dropped below 50%.

• The Dow Jones slipped 0.38%, the S&P 500 edged down 0.12%, while the Nasdaq Composite managed a 0.15% gain.
• US GDP rebounded at an annualized 3% in Q2, reversing a previous 0.5% contraction. Private payrolls beat forecasts, rising by 104,000 in July.
• Trade tensions flared as President Trump exempted major copper imports from tariffs, causing record intraday volatility in copper prices. Oil prices climbed to their highest since June, partly on tariff threats against India and potential penalties over Russian energy imports.

Asian Markets: Tech Leads, Investors Await Tariff Deadlines

• The MSCI Asia Pacific Index rose 0.2%, driven by TSMC and Samsung Electronics.
• South Korea and Taiwan outperformed, while Hong Kong lagged amid ongoing US-China trade talks.
• Japan’s central bank was expected to maintain rates, with markets watching for potential hikes later in the year.

Singapore Market Statistics

• Volume: 1,765.4m (-4.9%)
• Turnover: 2,063.0m (+23.8%)
• Gainers/Losers: 224/339

Company Highlights and Investment Analysis

Keppel Infrastructure Trust (KIT): Stable Results, Digital Infrastructure Ambitions

• 1H25 Distribution Per Unit (DPU) grew 1% YoY to 1.97 Singapore cents, in line with expectations and representing 50% of the full-year forecast.
• Group revenue surged 11.5% YoY to SGD1.1b, with distributable income up 31.2% YoY to SGD119.4m.
• Energy Transition segment FFO dropped 7.8% YoY to SGD109.7m, mainly due to low wind speeds at Borkum Riffgrund 2 (BKR2), though a recovery began late in the half.
• Environmental Services FFO plunged 37% YoY to SGD25.7m, with Eco Management Korea posting negative FFO amid landfill price volatility. Signs of recovery are emerging.
• Distribution & Storage FFO rose 3.8% YoY to SGD40.6m, led by Ventura. However, Ixom’s contribution was hit by AUD depreciation and Philippine Coastal’s divestment in March 2025.
• Net gearing improved to 39.3% (from 40.8% in March), with 80% of debt on fixed rates or hedged. A 25bps rate change impacts 1H25 DI by just 0.6%.
• Fair value estimate raised to SGD0.53. FY25 and FY26 DPU forecasts are marginally reduced, but a lower risk-free rate assumption supports the higher FV.

ESG Insights:

• KIT’s ESG rating remains strong, with leadership in business ethics and water management. Areas for improvement include air pollutant reduction and health/safety targets.
• Ambitious net zero targets for 2050 (Scope 1 & 2), and a renewables capacity goal of 2GW by 2030. Renewables capacity increased to ~1.3GW with recent acquisitions.

Recommendation: BUY

Keppel REIT (KREIT): Solid Rental Reversions, Slight DPU Dip

• 1H25 DPU fell 2.9% YoY to 2.72 Singapore cents (49.7% of full-year forecast). If management fees were fully paid in units, DPU would have increased 3.7% YoY.
• Property income and net property income climbed 9.1% and 11.8% YoY respectively; NPI attributable to unitholders rose 13.4%.
• Borrowing costs increased 12.1% YoY; 75% of management fees paid in units (vs. 100% in 1H24) dampened DPU.
• Portfolio rental reversions accelerated from 10.6% in 1Q25 to 12.3% in 1H25, driven by robust demand for Singapore CBD offices. Committed occupancy slipped marginally to 95.9%.
• Aggregate leverage ratio reduced to 41.7%, with 63% of borrowings fixed. Weighted average cost of debt stable at 3.51%.
• Lower borrowing cost expectations for 2H25 following a dip in SORA; some refinancing margins improved.
• Fair value estimate lifted to SGD0.95 (from SGD0.92); rating downgraded to HOLD due to limited total return expectations.

ESG Insights:

• KREIT’s ESG rating was upgraded in December 2021, reflecting strong governance and ethical business policies.
• 90% of the portfolio meets green building standards, well above the 2020 industry average. Talent pool development remains an improvement area.
• All Singapore office assets consistently hold BCA Green Mark Platinum certification; about half of borrowings are green loans.

Recommendation: HOLD

CapitaLand China Trust (CLCT): Challenging Environment, Earnings Miss

• 1H25 DPU dropped 17.3% YoY to 2.49 Singapore cents (43.5% of full-year forecast), missing expectations.
• Gross revenue and NPI declined 6.3% and 8.1% YoY, respectively, primarily due to weaker retail and business park performance. Logistics parks provided some offset.
• Distribution to unitholders fell 11.9% YoY to SGD45.2m, with some retention of distribution from CapitaMall Yuhuating.
• Retail revenue slipped 4.5% YoY; retail occupancy dipped 0.8ppt QoQ to 96.9%. Rental reversions were negative at -2.7%. Shopper traffic and tenant sales were essentially flat YoY.
• Business park revenue fell 12% YoY with -8% rental reversions, though occupancy improved to 86.9%.
• Logistics park revenue rose 2% YoY; occupancy improved to 96.6% but reversions were steeply negative (-24.7%) due to anchor tenant renewals at competitive rates.
• Gearing improved to 42.1%. Cost of debt down 9bps to 3.42%, with 87% of debt fixed. Plans to refinance SGD loans with CNY debt could further cut finance costs.
• Fair value estimate cut to SGD0.70 (from SGD0.765). Participation in CapitaLand Commercial C-REIT (CLCR) not yet modeled due to lack of details, but could be dilutive if proceeds go to debt repayment.
• Trading at 0.71x forward P/B and a 6.9% forward yield, close to historical averages but with further downside risks due to China’s macro headwinds.

ESG Insights:

• Strong governance led by a majority independent board and robust audit/business ethics oversight.
• Opportunities exist in human capital management and green building initiatives, with green leases offered to tenants.

Recommendation: HOLD

First REIT (FIRT): Currency Volatility Pressures Earnings

• 1H25 DPU declined 5.8% YoY to 1.13 Singapore cents, missing expectations amid persistent Indonesian Rupiah (IDR) volatility.
• Rental income and NPI declined 2.9% and 2.7% YoY to SGD50.5m and SGD48.9m, respectively. In local currency terms, Indonesian and Japanese assets saw 5.5% growth and flat performance, while Singapore assets posted 2% growth.
• Distributable income decreased 4.8% YoY to SGD23.8m, with DPU affected by a larger unit base. 2Q25 DPU fell 5.2% QoQ to 0.55 Singapore cents.
• Gearing edged up to 41.2% due to currency depreciation and working capital needs. Cost of debt increased to 4.8%, with 56.2% of debt fixed or hedged. No refinancing due until May 2026.
• SGD7m in rental arrears from Metropolis Propertindo Utama (MPU) as of June 2025; management is actively engaging the tenant.
• Fair value estimate maintained at SGD0.27; FY25 and FY26 DPU forecasts trimmed. Strategic review ongoing, with management monitoring FX hedging needs and costs.

ESG Insights:

• Reported Scope 3 emissions improved year-on-year. Over SGD1.3m invested in energy efficiency upgrades in FY24.
• Strong DEI (diversity, equity, inclusion) practices, with women comprising 70% of the workforce and 25 hours of training per employee in FY24.
• Comprehensive compliance policies in place covering ethics, anti-corruption, and data protection, with a focus on healthcare data security.

Recommendation: HOLD

Latest Equity Research Ratings and Fair Values

STI Stocks by Market Capitalisation and Key Metrics

Conclusion: Market Watch and Investment Outlook

July 2025 reflects a mixed but resilient performance across Singapore and global markets. While the US Fed’s cautious stance and global trade tensions inject volatility, Singapore-listed companies display robust fundamentals and ongoing ESG progress. Investors should remain selective, focusing on companies with strong capital management, visible ESG improvements, and resilient earnings, while closely monitoring macroeconomic and FX-related risks.