UOB Kay Hian
August 1, 2025

Asia-Pacific Markets: Sector Trends, Earnings Highlights & Top Stock Picks for 2H25

The latest UOB Kay Hian regional research covers Greater China, Southeast Asia, and Thailand, offering thorough insights into economic trends, sector performances, and key corporate results as of early August 2025. This comprehensive analysis presents market implications, detailed company financials, and actionable recommendations for investors navigating an evolving macro landscape.

Asia-Pacific Macroeconomic and Market Overview

• Major Indices Performance: The S&P 500 closed at 6,339.4, up 2.2% over the month and 7.8% year-to-date. The Hang Seng Index (HSI) showed robust YTD growth of 23.5%. The Nikkei 225 gained 2.7% for the month and 2.9% YTD.
• Key Economic Assumptions: US GDP growth is forecast at 1.0% in 2025, Euro Zone at 0.5%, China at 4.2%, and Malaysia at 4.0%.
• Commodities: Brent crude is projected to average US\$70/bbl in 2025. CPO prices are forecast at RM4,500/mt.

Economic Snapshot: China’s PMI Recovery Falters

July 2025 marks a setback for China’s economic momentum:

• Manufacturing PMI fell to 49.3, missing expectations and remaining in contraction for the third month, with output at 50.5 and new orders slipping to 49.4. Both large and small enterprises registered a -0.9pt MoM decline.
• Non-Manufacturing PMI eased to 50.1, weighed by a sharp drop in construction activity (down 2.2pts to 50.6).
• Cost Pressures: Input prices surged, with purchase prices at 51.5 (highest since Oct 2024), hinting at margin compression risks.
• Sector Outlook: While current demand is tepid, business expectations have improved, buoyed by targeted anti-involution initiatives.

China Autos: Anti-Involution Initiatives Shape Sector Outlook

The ongoing anti-involution drive is reshaping China’s auto sector, with implications for OEMs, auto parts suppliers, and dealers.

• PV Sales remain under pressure, with a shift in preference towards auto parts makers over OEMs and dealers.
• Tesla China saw insurance registrations fall 21.4% YoY, as customers await the Model Y L launch in Fall 2025.
• Top Buys: CATL, Geely, and Tuopu are preferred for their competitive edge and value. CATL’s A-shares remain a BUY with a RMB390 target; H-shares are downgraded to HOLD after hitting the HK\$420 target.

Budweiser APAC: In-line Q2, China Volume Weakness in Q3

Budweiser APAC reported solid Q2 2025 results, in line with expectations:

• Q2 Revenue: US\$1,679m (+1% YoY), driven by a 2% ASP increase offsetting volume declines.
• Gross Profit: US\$868m (51.8% margin, +0.7ppt YoY); normalized EBITDA US\$498m (29.7% margin).
• Outlook: Management expects Q3 China volumes to remain pressured, with a rebound in Q4 as destocking efforts and anti-extravagance policy impacts fade.
• Valuation: BUY maintained, DCF-based target price HK\$12.00 (10.1x 2025 EV/EBITDA). The stock trades at a marked discount (6.4x 2025 EV/EBITDA).

Plover Bay Technologies: Robust 1H25 Growth from EMEA and Asia

Plover Bay Technologies delivered a strong first half, highlighted by:

• 1H25 Net Profit: US\$21.7m (+13.4% YoY), representing 47% of full-year estimates.
• Revenue: Recurring revenue up 12.5% YoY to US\$17.7m (28.1% of sales). Gross margin was steady at 55.5%.
• Dividend: Interim payout ratio of 80.5% (12.34 HK cents DPS).
• Valuation: BUY, TP HK\$7.61 (23.8x 2025F PE), implying a 4.6% dividend yield for 2025.

TAL Education: Earnings Beat, AI Learning Devices Drive Growth

TAL Education Group posted a robust set of results for 1QFY26:

• Q1FY26 Revenue: US\$575m (+39% YoY), gross profit up 47% to US\$315m (55% margin).
• Non-GAAP Net Profit: US\$42m (7% net margin), beating consensus (US\$31m).
• Growth Drivers: AI learning devices and resilient small class enrichment programs. Deferred revenue jumped 44% YoY, signaling strong future demand.
• Valuation: BUY, target price US\$14.00. FY26F PE at 8.3x, with anticipated 9.3% net margin.

Indonesia: Bumi Resources Minerals and Indosat

Bumi Resources Minerals (BRMS): Soft Quarter, Long-Term Story Intact

• 2Q25: Core net profit at US\$14.2m (+119.3% YoY, -31.1% QoQ) after adjusting for US\$14m in non-recurring expenses.
• 1H25 Net Profit: US\$22m (+136% YoY), driven by higher sales and ASPs. Strong pipeline supports upbeat 2025F/2026F net profit projections (US\$46m/US\$51m).
• Valuation: BUY, TP Rp610. PE remains high due to early-stage earnings recovery; long-term growth potential remains robust.

Indosat (ISAT): Revenue Down, Downgraded to HOLD

• 2Q25 Revenue: Down 4% YoY due to negative seasonality effects. ARPU slightly decreased 2% QoQ with flat subscriber numbers at 95.4m.
• Guidance: 2025/2026 revenue and EBITDA estimates cut by 3.5-4.5% and 8.8-9%, respectively. EBITDA margin forecast at 46.7% for 2025.
• Valuation: Downgraded to HOLD, TP reduced to Rp2,400. Shares trade at 4.1x 2025 EV/EBITDA, near -0.75SD of historical average.

Malaysia: Strategy, Banking, and Sector Picks

13th Malaysia Plan (13MP): Elevation, Empowerment, and Reformation

• Policy Focus: Economic restructuring aims to raise Malaysia to a high-tech, high value-added economy. Pillars include economic diversity, social mobility, public service reform, and people’s well-being.
• 2025-30 Ambitions: GDP growth at 4.5-5.5% p.a., GNI per capita >RM77,200, fiscal deficit <3% of GDP, 1.2m new jobs, and average household income >RM12,000.
• Market Outlook: Recovery anticipated in 2H25, with end-2025 FBMKLCI target of 1,620 (14.9x 2025F PE). Tactical upside seen in EMS and OSAT/SPE names if tariffs remain favorable.

Banking Sector: Loans Growth Tapers Amid Caution

• Loans Growth: Softened to 5.1% YoY in June 2025, with weaker business lending. Household loan growth stable at 5.9%.
• Credit Quality: GIL ratio down to 1.42%; loan loss coverage at a healthy 90%.
• Top Picks: Hong Leong Bank (BUY, RM23.80 TP), Public Bank (BUY, RM4.90 TP), AMMB (BUY, RM6.08 TP).

Singapore: REITs, Keppel, Seatrium, and Sheng Siong

S-REITs: Resilient Yields, Selective Upside

• Top Picks: CICT (BUY, S\$2.72 TP), CLAR (BUY, S\$4.02), DCREIT (BUY, US\$0.88), FCT (BUY, S\$3.07), KDCREIT (BUY, S\$2.69), LREIT (BUY, S\$0.76).
• Yields: Forward distribution yields for top S-REITs range 5.0%-6.5%, with yield spreads still attractive above 10-year government bond yields.

Keppel Ltd: Strong Growth, Asset-Light Transformation

• 1H25 Net Profit: S\$431m (+25% YoY), driven by infrastructure and real estate.
• Capital Recycling: S\$915m in proceeds YTD, with S\$500m more in 2H25 transactions.
• Dividend: Interim S\$0.15/share, share buyback program of S\$500m.
• Valuation: BUY, target S\$9.51. Asset-light model and platform scale bolster medium-term re-rating potential.

Seatrium: Margin Expansion and Balance Sheet Strength

• 1H25: Robust revenue growth, gross margin expansion, and 10% YoY reduction in gross debt.
• Net Profit: S\$157m (2024), forecast to rise to S\$289m in 2025F.
• Valuation: BUY, target S\$2.96. Continued operational flexibility and low net debt/equity position support outlook.

Sheng Siong Group: Margin Strength and Store Expansion

• 2Q25: Solid margin performance and ongoing store growth.
• Target Price: Raised by 22% to S\$2.40. BUY maintained.

Thailand: BAM, STECON Group, and The Erawan Group

Bangkok Commercial Asset Management (BAM): Initiate BUY on Largest AMC

• Portfolio: Bt123b in 1Q25, with 45% market share in 2024.
• 2025 Net Profit: Forecast to rise over 30% YoY to Bt2.04b, driven by major NPL repayments and NPA sales.
• Dividend: 2024 payout ratio was 72%, with a 5.7% yield. Management signals higher payouts ahead.
• Valuation: BUY, target price Bt9.50 (0.5x 2026F P/B).

STECON Group: Earnings Rebound Expected in Q2

• 2025F Net Profit: Bt926m, up from a large loss in 2024. Forecast 23.4% earnings growth in 2026.
• Valuation: BUY, target price Bt9.00. Key catalysts include sizable infrastructure project wins.

The Erawan Group (ERW): Weak Q2, Muted Outlook

• 2Q25 Net Profit: Bt45m (down 70% YoY), hit by falling Chinese occupancy and weak luxury segment.
• 2025F Net Profit: Bt794m, with further downside risk as recovery in Chinese arrivals and renovation drag on outlook.
• Valuation: Downgraded to HOLD, TP Bt2.50. Valued at 10x EV/EBITDA, about 1SD below historical average.

Conclusion: Investment Outlook for 2H25

Asia-Pacific markets are navigating a period of macro uncertainty, with sector-specific opportunities emerging in high-quality banks, select consumer/tech names, and defensive REITs. Company-level execution and government policies such as China’s anti-involution drive and Malaysia’s 13MP will shape relative winners as 2025 unfolds. Investors are advised to focus on sector leaders with robust balance sheets, visible earnings growth, and attractive valuations.