Broker: Lim & Tan Securities
Date of Report: 11 August 2025

Singapore Market Outlook August 2025: DBS Stands Out as Banks Face Macro Headwinds and Centurion Shines in Worker Accommodations

Market Overview: STI and Global Indices Performance

The Singapore Straits Times Index (FSSTI) closed at 4,239.8, reflecting a 0.4% daily decline but maintaining a robust 11.9% year-to-date (YTD) gain. Global indices delivered mixed results: the Dow Jones closed at 44,175.6 (+0.5%), S&P 500 at 6,389.5 (+0.8%), and the tech-heavy Nasdaq at 21,450.0 (+1.0%). The Hang Seng Index (HSI) stood out with a remarkable 23.9% YTD performance, despite a 0.9% daily dip. The VIX Index dropped 8.6% to 15.2, continuing its 2025 trend of declining volatility.

Sector and Commodity Performance

• Gold prices surged 29.3% YTD, closing at 3,394.3.
• Crude oil dipped 10.9% YTD, now at 63.9.
• The Baltic Dry Index soared 105.7% YTD, indicative of robust shipping demand.
• Crude palm oil prices grew 4.1% YTD to 4,255.0.

Singapore Banks: DBS Outshines as UOB and OCBC Miss Expectations

UOB and OCBC: Disappointing 1H 2025 Results and Lower Guidance

• UOB (\$35.70, down \$0.10) and OCBC (\$16.79, down \$0.30) both reported 1H 2025 performances below market expectations, with profits falling 3-7% year-on-year (yoy) against expectations of flat or marginal growth.
• Key drivers of underperformance: weaker-than-expected net interest margins (NIMs), net interest income, subdued loans, and slower fee income growth.
• Both banks revised down their loan growth guidance to low single digits and expect only single-digit fee income growth (down from previous double-digit forecasts).
• For FY25, UOB expects NIM of 1.85%-1.9% (previously 2%), while OCBC guides to 1.9%-1.95% (previously 2%).
• Dividend cuts: UOB reduced its interim dividend from 88 cents to 85 cents but will pay a special 25-cent dividend in August (in addition to the 25 cents paid in February) for its 90th anniversary. OCBC trimmed its interim dividend from 44 cents to 41 cents and plans a special dividend equivalent to 10% of net profit after tax at FY25-end, on top of its 50% payout ratio.

DBS: The Standout Performer

• DBS (\$50.75, up \$0.75) marginally beat market expectations, maintaining stable performance guidance for 2H 2025 and targeting a 17% return on equity (ROE).
• DBS increased its interim dividend from \$1.08/share to \$1.20/share for 1H 2025 and declared a special 30-cent dividend, with management hinting at similar payouts for 2H 2025, FY26, and FY27.
• At current prices, DBS offers a yield close to 6%, higher than UOB and OCBC (around 5%). Its price-to-book (P/B) ratio stands at 2x, justified by its superior 17% ROE (UOB and OCBC: 1.3x P/B and 12-13% ROE).
• All three banks are actively executing share buybacks, having completed 12-14% of their mandates.

Bank Valuations and Broker Recommendations

• UOB and OCBC have been downgraded to “HOLD” due to limited catalysts, while DBS retains an “Accumulate” rating with a revised target price of \$55 and an attractive 5.45% dividend yield, representing an 8.4% potential upside.
• UOB and OCBC trade at 1.2x P/B and 11-12x PE, while DBS trades at 2x P/B and 13x PE, reflecting its stronger earnings and dividend outlook.
• Downside support for all three banks comes from ongoing share buybacks, with only about 12-13% of mandates fulfilled thus far.

The macro environment is expected to become more challenging in 2H 2025, due to weakening global labor markets, rising tariffs, volatile forex, expected interest rate cuts, and geopolitical instability. All three banks have strengthened provisioning buffers, diversified income streams, and fortified balance sheets.

Other Notable Stocks: Dividend Yields, Valuations, and Sector Leaders

Centurion Corporation: Leading the Worker Accommodation Sector

Centurion Corp (S\$1.69, down 12 cents) showcased its Westlite Ubi property to media and analysts, underlining its commitment to improving living standards for migrant workers. Westlite Ubi, opened in Q4 2024, is a 1,650-bed Purpose-Built Worker Accommodation (PBWA) compliant with Singapore’s Ministry of Manpower’s New Dormitory Standards (NDS), which only become mandatory in 2040.

• Full financial occupancy was achieved by April 2025, reflecting strong demand, especially given its proximity to key industrial clusters.
• Westlite Ubi sets a new benchmark with a cap of 12 residents per room, minimum 4.2 sqm living space per resident, 1-metre bed spacing, and at least one en-suite toilet/shower for every six residents (Westlite Ubi offers two per 12-resident room).
• Features include a well-equipped gym, privacy corners, and modern interiors designed for comfort and wellbeing.
• Centurion is proactively upgrading its five Purpose-Built Dormitories ahead of the 2040 deadline. Redevelopment at Westlite Toh Guan and Westlite Mandai (adding 1,764 and 3,696 beds by 2026, respectively) will exceed NDS requirements.
• Sector resilience is highlighted by strong occupancy, positive rental trends, and sustained performance, attracting institutional and government-linked investors like Malaysia’s KWAP.
• Centurion trades at 13.4x forward P/E and 1.2x P/B, with a 2.4% annualized dividend yield. Despite a 13%/19% yoy increase in 1H25 revenue/core profits, share price weakness followed a 38% headline profit drop due to lower fair value gains on investment properties. An “Accumulate on Weakness” recommendation remains, pending a likely REIT spin-off on SGX-ST in the coming months.

Fund Flows: Institutional and Retail Movements

For the week of 28 July 2025, institutional investors registered a net sell of S\$494.6 million (vs. +S\$335.4m prior week), while retail investors were net buyers at +S\$380.8 million (vs. -S\$159.6m last week).

Share Transactions and Buybacks

• Significant insider buys included Credit Bureau Asia, Sanli Environmental Engineering, Indofood Agri Resources, Stamford Land, Old Chang Kee, Asian Pay TV Trust, and GKE Corp.
• Notable disposals occurred at Sanli Environmental, GKE Corp, Hoe Leong Corp, and Telechoice International.
• Active share buybacks were seen at HK Land, Medinex, Global Investment, Olam, Keppel Ltd, OCBC, Zheneng Jinjiang, FNN, Unusual, Raffles Medical, SIA Engineering, OUE Ltd, DBS, ST Engineering, and The Hour Glass.

Dividend Announcements

SGX Watch-List: Companies Under Review

A total of 32 companies remain on the SGX Watch-List due to various compliance or performance issues. Recent additions include Addvalue Technologies, Renaissance United, Telechoice, Tiong Seng Holdings, Global Invacom Group, Green Build Technology, Keong Hong, and Camsing Healthcare.

Macro and Regional Market Insights

• US: The July Empire Fed index rebounded to 5.5 from -16.0, but underlying strength remains shallow with flat new orders and high inventories. Input costs are rising faster than output prices, squeezing margins. Despite a stronger employment component, there’s no confirmation of broad labor market improvement. US equities may face negative convexity risks; downside protection is advised for bullish investors.
• China/HK: Wealth management firms are pivoting from private equity to more liquid hedge fund strategies, responding to client demand for liquidity in the face of macro uncertainty. Family offices in Hong Kong are building hedge fund teams and expanding globally.

What’s Ahead: Key Events and Earnings Dates

August is packed with earnings and dividend events across the Singapore market, including results from OCBC, UOB, DBS, Genting, SCI, SGX, Daiwa House, Hong Leong Finance, APAC Realty, and multiple REITs. Keep an eye on the calendar for first-day ex-dividend and payout dates.

Conclusion

DBS remains the top pick among Singapore banks for its strong earnings visibility, stable dividends, and robust ROE, even as UOB and OCBC face downgrades due to muted growth prospects. Centurion Corporation continues to set the standard in the worker accommodation sector, with upcoming REIT plans likely to catalyze further investor interest. Broader market conditions remain challenging, but select Singapore blue chips and resilient sectors offer compelling opportunities for discerning investors.