CGS International
Date of Report: August 29, 2025
Singapore’s Stock Market Outlook 2025: Sectors, Stocks & Strategies for the Next Bull Run
Overview: Riding the Liquidity Wave Into 2025
Singapore’s equity market is poised for continued growth into the rest of 2025, propelled by a robust liquidity environment, positive news flow from the Monetary Authority of Singapore’s S\$5bn Equity Market Development Programme (EMDP), and a sustained trend of market earnings growth. The backdrop of declining global interest rates is expected to further stoke investor risk appetite, making Singapore equities an attractive option for both domestic and international investors.
As of this report, the Singapore market trades at a forward P/E of 14.8x, below its long-term mean of 16.7x, and offers a projected dividend yield of 4.2%. After a strong 19.1% year-to-date rise in the SIMSCI index, investors are advised to seek alpha in laggard sectors and stocks, particularly among REITs and select small- to mid-cap names.
Table of Contents
- Results Season Wrap-Up
- Earnings Forecast Changes by Sector
- Valuation Trends and Market Technicals
- Sectors & Stock Picks: In-Depth Analysis
- Key Risks and Economic Outlook
1H25 Results Season: Performance Review
The first half of 2025 saw an equal mix of earnings hits and misses across reporting companies, with about half meeting expectations. Misses were primarily due to weaker operating conditions, compressed net interest margins (NIMs), and lower trading gains. Several upgrades and downgrades were made in response to these results:
- Upgrades (to Add): SGX, Venture (VMS), ISDN, UMS, Riverstone (RSTON)
- Hold Ratings: AZTECH, AEM
- Downgrades: ST Engineering (STE), Delfi, UOB, CDL Hospitality Trust, Sheng Siong (SSG), Singapore Airlines (SIA), SIA Engineering (SIE)
Most companies maintained their 2025 outlooks, awaiting further clarity in the second half of the year.
Key Earnings Surprises
- China Aviation Oil (CAO): Lower opex and tax drove results above expectations.
- Hong Leong Asia: Strong engine sales outperformed.
- SIA Engineering: Significant rise in associate and JV profits.
- Yangzijiang Shipbuilding: Gross profit margin up from lower steel costs.
- Food Empire Holdings (FEH): Double-digit growth across regions.
- HRnetGroup: Benefited from front-loaded government grants.
- APAC Realty: Revenue boost from higher new home sales volume.
- ESR-REIT (Industrial): Interest cost savings and positive rental reversions.
- Keppel DC REIT: Stronger rental reversions.
Earnings Forecast Changes by Sector
| Sector |
CY25F Core Net Profit (S\$m) |
CY26F Core Net Profit (S\$m) |
YoY Change CY25F/CY26F |
Key Comments |
| Financials |
25,309 |
26,683 |
-1.2% / -0.4% |
NIM pressure from rate cuts |
| Property |
3,100 |
2,730 |
+21.8% / +1.6% |
Uplift from capital management, value unlocking |
| REITS |
4,920 |
5,186 |
-0.3% / +0.0% |
Interest cost savings |
| Telcos |
2,923 |
3,269 |
-4.6% / -3.5% |
Dividend support, but growth capped |
| Transport |
1,702 |
1,504 |
-6.2% / -6.8% |
Weaker outlook |
Overall, core net profit growth for CY25F/CY26F is projected at +4.6% and +7.2%, respectively. Sectors with upward earnings revisions include property, construction, and select industrials.
Market Valuation and Technicals
Singapore’s MSCI index trades at a 12-month forward core P/E of 14.8x, still below the historical mean of 16.7x. Dividend yields remain attractive at 4.2%. The market’s ROE is stable at 12.3%, and net gearing (ex-banks) is projected to fall from 25.2% to 17.5% over the next two years. Technical analysis confirms a bullish long-term outlook, with a golden cross in major moving averages and robust MACD momentum, targeting SIMSCI at 517.00 points in the long run.
Sector Highlights and Stock Picks
Capital Goods
Top Picks: Yangzijiang Shipbuilding (YZJSGD), Keppel Ltd (KEP), CSE Global (CSE), Sembcorp Industries (SCI)
- Yangzijiang Shipbuilding (YZJSGD): The best earnings performer in the sector, driven by a strong 35% gross margin due to lower steel costs. The stock trades at a significant 30% discount to regional peers and is expected to see continued strength.
- Keppel Ltd (KEP): Potential for special dividend payout (up to S\$0.22 per share) from recent divestment proceeds. KEP’s normal dividend yield averages 5.4%.
- CSE Global (CSE): Rapid growth in the data centre segment, now about 15% of its order book, is expected to transition into a recurring, higher-margin business model. Order book YTD stands at S\$634m.
- Sembcorp Industries (SCI): Recent price correction of 28% post-results is seen as overdone. Trading at 10x CY26F P/E, 30% below regional peers, with defensive earnings from long-term contracts and potential IPO of its India renewable energy business.
Consumer
Top Pick: Food Empire Holdings (FEH)
- FEH continues to benefit from capacity-driven expansion and a higher-margin product mix, particularly in Russia, Ukraine, and the CIS. Management guided for another record-breaking year in FY25F and declared a maiden interim dividend of 3.0 Scts. Net margins are forecast to surpass 10% for FY25F-27F.
- DFI Retail Group is expected to see margin improvements in Health & Beauty and Grocery segments, especially after strategic store network optimization and the sale of its Singapore Food business.
Financials
Top Pick: DBS Group
- The sector faces imminent headwinds from interest rate cuts, which are expected to compress NIMs. However, banks’ ability to deploy excess liquidity into high-quality assets should support NII. DBS is favored for its visibility in dividend growth and solid capital position. OCBC and UOB maintain cautious guidance amid slower loan growth and investment in IT infrastructure.
Gaming
Top Pick: Genting Singapore (GENS)
- GENS offers an undemanding valuation at 5.7x 12M-forward EV/EBITDA, with incremental profitability expected from new attractions opening in 3Q25F. Downside risk comes from stagnant tourism and gaming market share challenges.
Healthcare
Top Pick: Hyphens Pharma International (HYP)
- Despite one-off expenses, core operations remain resilient for QNM, HYP, and Raffles Medical (RFMD). All have strong balance sheets and are actively seeking M&A-driven growth. HYP is especially well-positioned for hoh PATMI growth in 2H25F through a shift to higher-margin products.
Internet Services
- Sea Ltd (SE) and Grab delivered strong GMV growth, but face margin pressure from reinvestment and competition. Management focus is on topline and maintaining share in key markets. Sequential adjusted EBITDA margins have compressed.
Property & REITs
Top Picks: UOL, CapitaLand Integrated Commercial Trust (CICT), CapitaLand Ascendas REIT (CLAR), Lendlease Global Commercial REIT (LREIT)
- Developers’ share prices are up 25% YTD on average, trading at 0.62x P/BV and a 50% discount to RNAV. Low mortgage rates and active capital management drive continued outperformance.
- REITs are set to benefit from further Fed rate cuts, with sector yields at 5.7% (320bp spread to 10-year bonds) and P/BV at 0.92x. Falling interest rates should drive DPU growth via interest cost savings, especially for those with floating S\$ debt exposure.
Top Conviction Picks for 2025
| Company |
Ticker |
Rec |
Price (S\$) |
Target Price (S\$) |
Upside (%) |
CY25F P/E (x) |
Div Yield (%) |
3Y EPS CAGR (%) |
| CapitaLand Integrated Commercial Trust |
CICT SP |
Add |
2.26 |
2.45 |
13.3 |
20.9 |
5.0 |
4.9 |
| CapitaLand Ascendas REIT |
CLAR SP |
Add |
2.70 |
3.15 |
22.2 |
17.9 |
6.2 |
5.7 |
| Keppel Ltd |
KEP SP |
Add |
8.48 |
10.23 |
24.8 |
17.9 |
7.5 |
4.1 |
| SATS Ltd |
SATS SP |
Add |
3.32 |
3.83 |
16.8 |
19.0 |
1.6 |
9.8 |
| Sembcorp Industries |
SCI SP |
Add |
6.03 |
8.02 |
36.7 |
11.1 |
3.8 |
16.6 |
| Yangzijiang Shipbuilding |
YZJSGD SP |
Add |
2.92 |
3.90 |
38.5 |
8.0 |
4.9 |
27.6 |
Small and Mid-Cap Alpha Picks
- BRC Asia (BRC), China Aviation Oil (CAO), CSE Global (CSE), Food Empire Holdings (FEH), Frencken Group (FRKN), LHN Ltd (LHN), Lendlease Global Commercial REIT (LREIT), UMS Integration (UMS)
These stocks offer a combination of strong earnings growth, attractive valuations, and robust dividend yields.
Sector-by-Sector Summary
- REITs: Overweight. Top picks: CLAR, CICT, LREIT. Yield spread to bonds remains robust. Interest rate tailwinds expected to boost sector results.
- Technology: Semicon industry is in recovery, with WSTS forecasting 15.4% global sales growth in 2025 and 9.9% in 2026. Frencken and UMS are highlighted as key beneficiaries.
- Telcos: SingTel offers a sustainable 4.6% dividend yield, but growth is capped by current valuations. StarHub maintains stable performance.
- Transport: SATS is favored for its global air cargo and food solutions diversification. ComfortDelGro is also highlighted for its steady cash flows.
- Property: UOL, CICT, CLI preferred for their value unlocking initiatives, low mortgage rates, and active capital management.
Key Risks
- Geopolitical and global trade tensions
- Slower-than-expected interest rate cuts
- Macro uncertainty, especially in global trade and tourism
Conclusion: Ample Fuel for Growth, But Mind the Risks
Singapore’s market outlook remains constructive, supported by structural liquidity, undervaluation, and sector-specific catalysts. Investors are advised to focus on laggard sectors like REITs, capitalize on earnings growth stories, and stay alert to the shifting macro landscape. The SIMSCI index target is lifted to 463.8 points, with upside potential if the current bullish technical trends persist.
This detailed strategy and stock analysis provides actionable insights for investors seeking alpha in Singapore’s dynamic equity market in 2025 and beyond.
