Broker: UOB Kay Hian
Date of Report: Thursday, 15 May 2025

Singapore Market Update: In-Depth Equity Analysis on AEM, ComfortDelGro, Genting Singapore, United Hampshire US REIT, and Venture Corporation

Key Indices and Market Overview

• The Straits Times Index (FSSTI) closed at 3,871.1, down 0.3% for the day, but up 6.8% over the past month and 2.2% year-to-date.
• Regional indices showed mixed performance, with notable gains in the Hang Seng Index and KOSPI.
• Top trading turnover companies in Singapore included DBS Group Holdings, United Overseas Bank, and Singapore Telecommunications.
• Top gainers were Hotel Properties, UOB-Kay Hian Holdings, and Frasers Hospitality Trust, while Thai Beverage and Digital Core REIT Management led the list of losers.

AEM Holdings (AEM SP): Earnings Remain Weak Despite Stable Revenue

Stock Overview

• Share Price: S\$1.29
• Target Price: S\$1.09 (Downside: -15.5%)
• Current Recommendation: SELL (Maintained)
• Market Capitalization: S\$404.0m
• Main Shareholders: Temasek Holdings (12.5%), EPF (11.2%)

1Q25 Results and Financial Highlights

• Revenue: S\$86m (-9% YoY, -35% QoQ), meeting 22% of full-year estimates.
• Net Profit: S\$3m (+43% YoY, -71% QoQ), with a weak net margin of 3.9%.
• Test Cell Solutions (TCS) revenue saw a 47% decline QoQ due to customer order pull-in from 2025 to 4Q24.
• Contract Manufacturing (CM) revenue accounted for 38% of 1Q25 revenue, down 3% QoQ, supported by a diverse customer base across life sciences, aerospace, oil & gas, and industrials.
• 1H25 revenue guidance maintained at S\$155m–S\$170m, supported by differentiation in thermal technology for AI/HPC device testing.

Key Financial Metrics

Outlook and Valuation

• AEM’s AMPS-BI system moved into volume production with positive customer validation.
• Continued development for AI and GDDR7 devices expected to ramp up in late 2025.
• Maintain SELL rating; valuation is rich at 18x 2025 PE, target price S\$1.09 reflecting earnings trough cycle.
• Positive catalysts: Surprises in revenue guidance or new customer wins.

ComfortDelGro Corporation (CD SP): Mixed 1Q25 Results, Stronger Growth Expected

Stock Overview

• Share Price: S\$1.52
• Target Price: S\$1.71 (Upside: +12.8%)
• Recommendation: BUY (Maintained, TP revised from S\$1.76)
• Market Capitalization: S\$3,205.8m
• Dividend Yield (2025F): 5.8%

1Q25 Performance Highlights

• Revenue: S\$1,169.7m (+16.4% YoY), in line with expectations, driven by all segments.
• Core PATMI: S\$47.3m (+18.8% YoY), below expectations due to higher amortization costs from a new Purchase Price Allocation (PPA) accounting change.
• Public transport segment: Revenue +2.6% YoY, operating profit +52.9% YoY, margin expansion to 4.8%.
• Taxi segment: Revenue surged +74.0% YoY, core operating profit +36.9% YoY, supported by acquisitions (Addison Lee and A2B), but competition remains stiff and China rentals subdued.

Key Financial Metrics

Outlook and Valuation

• UK bus contract renewals to drive margin improvements through 2025, with renewed contracts expected to boost results from 2Q25 onwards.
• Domestic rail ridership and fare increases to support growth; Seletar bus package renewal may soften margins.
• Taxi segment to benefit from acquisitions, but faces headwinds from ride-hailing competition and weak China rentals.
• Core PATMI estimates for 2025–2027 trimmed by ~3% due to higher amortization costs; new 2025F PATMI: S\$228.0m.
• Maintain BUY with a lower target price of S\$1.71, reflecting 16x 2025F PE, aligned with 5-year average.
• Key catalysts: Overseas acquisitions, higher taxi commission rates.

Genting Singapore (GENS SP): Soft First Quarter, Attractive Yield and Valuation

Stock Overview

• Share Price: S\$0.735
• Target Price: S\$0.90 (Upside: +22.4%)
• Recommendation: BUY (Maintained; TP lowered from S\$1.12)
• Market Capitalization: S\$8,880.9m
• Dividend Yield (2025F): 5.4%

1Q25 Financial and Operational Review

• Revenue: S\$626.2m (+2.3% QoQ, -20.2% YoY), with Singapore revenue at S\$626.0m.
• Gaming Revenue: S\$437.5m (+5.3% QoQ, -24.0% YoY).
• Non-Gaming Revenue: S\$188.5m (-4.1% QoQ, -9.5% YoY).
• Adjusted EBITDA: S\$235.8m (+4.6% QoQ, -36.2% YoY), margin at 37.7%.
• Core Net Profit: S\$150.3m (+4.5% QoQ, -39.7% YoY).
• YoY decline mainly due to exceptionally strong 1Q24 from Taylor Swift concerts; 1Q25 EBITDA only 20% of full-year forecast.

Key Financial Metrics

Strategic and Operational Insights

• Tourist arrivals in 1Q25 reached 92% of pre-pandemic levels, boosted by mutual visa exemptions and major events.
• Headwinds include softening consumer sentiment, macro uncertainties from US tariffs, and increased competition from Marina Bay Sands (MBS), which recently renovated its 1,850 hotel rooms.
• RWS 1.5 and 2.0 projects (Minion Land, Singapore Oceanarium, super luxury all-suite hotel, and future Waterfront development) expected to drive future vibrancy and growth.
• Leadership changes with CEO retirement are assessed to have minimal operational impact.
• Healthy balance sheet with S\$3.58b net cash offers flexibility for higher dividends or new investments (e.g., potential Thailand IR bid).

Valuation and Outlook

• 2025–2026 earnings forecasts reduced by 12–17% due to weaker average spending and business volume.
• Maintain BUY, lower target price to S\$0.90 (8x 2025F EV/EBITDA, -1SD below mean).
• GENS trades at a 5.4% yield, with net cash per share representing 41% of market cap.
• Key catalysts: Recovery in tourism, new attractions, and potential for higher dividends.

United Hampshire US REIT (UHU SP): Defensive Play with Attractive Yield

Stock Overview

• Share Price: US\$0.445
• Target Price: US\$0.64 (Upside: +43.8%)
• Recommendation: BUY (Maintained)
• Market Capitalization: US\$262.8m
• Distribution Yield (2025F): 10.0%

1Q25 Performance and Portfolio Highlights

• Gross Revenue: US\$18.1m (-2.0% YoY); Net Property Income: US\$11.7m (-8.4% YoY).
• Distributable Income: US\$6.3m (-1.6% YoY), in line with expectations.
• Stable portfolio occupancy at 97.2%, with a long WALE of 7.8 years.
• Positive rental reversion at mid-single digits; six new/renewal leases signed totaling 46,487 sq ft.
• Leverage reduced to 39.2% after divestments; no loans maturing until Nov 2026; 74% of loans hedged to fixed rates.

Key Financial Metrics

Outlook and Investment Merits

• Defensive income stream: 58.4% of base rental income from tenants providing essential services.
• Minimal leasing risk, with only 1.8% of leases expiring in 2025.
• Triple net leases shelter UHU from inflation, as tenants reimburse taxes, insurance, and maintenance.
• Physical stores serve as fulfillment hubs for omnichannel retailing, driving continued traffic and demand.
• Institutional interest in grocery-anchored strip centers is rising, with improved lending conditions and notable transactions (e.g., Blackstone’s US\$4b acquisition of Retail Opportunity Investments).
• Maintain BUY; target price US\$0.64 based on dividend discount model (cost of equity: 9.0%, terminal growth: 1.5%).
• Key catalysts: Resiliency in necessity spending, yield-accretive acquisitions.

Venture Corporation (VMS SP): Below Expectations, Facing Tariff-Induced Uncertainty

Stock Overview

• Share Price: S\$11.27
• Target Price: S\$12.01 (Upside: +6.6%)
• Recommendation: HOLD (Maintained; TP cut from S\$13.35)
• Market Capitalization: S\$3,242.2m
• Dividend Yield: 6.7%

1Q25 Results Overview

• Revenue: S\$616.6m (-7.5% YoY), due to weak demand in the Lifestyle Consumer technology segment.
• Net Profit: S\$55.9m (-7.0% YoY), forming only 22% of full-year estimate.
• Net Margin: 9.1% (up 0.1ppt YoY), showcasing cost efficiency and focus on high-value solutions.

Key Financial Metrics

Strategic and Financial Insights

• R&D innovations improved product reliability, reducing replacements but impacting short-term revenue in Lifestyle Consumer tech.
• Excluding this segment, revenue would have risen YoY, with Networking, Communications, and Advanced Industrials showing progress.
• Customers cite ongoing tariff situation as a major source of uncertainty with no clear resolution in sight.
• VMS holds S\$1.3b net cash (30% of market cap), continues consistent dividend payments, and executed S\$17.4m share buybacks in 2025.
• 2025–2027 earnings forecasts reduced by 9–14% on weaker customer demand; maintain HOLD with TP S\$12.01 (15.3x 2025F PE).
• Key catalysts: Growth in hyperscale data centers, advanced semiconductors, and capital management initiatives.

Technical Trading Ideas: AEM Holdings and Singapore Exchange

• AEM Holdings: Trading BUY (entry S\$1.25–1.26, target S\$1.59, stop S\$1.18). Price broke out of flag pattern, with rising RSI and Bollinger band. Institutional research rates as fundamental SELL (TP S\$1.09).
• Singapore Exchange: Trading SELL (entry S\$14.00–14.03, target S\$12.43, stop S\$14.70). Double-top reversal pattern, weakening RSI. Institutional research rates as HOLD (TP S\$12.58).

Conclusion: Market Themes and Key Takeaways

• Singapore equities are facing mixed headwinds and tailwinds across major sectors, with defensive names like ComfortDelGro and United Hampshire US REIT standing out for yield and resilience.
• Technology providers such as AEM and Venture continue to navigate a challenging environment marked by global trade volatility and uncertain demand cycles.
• Genting Singapore remains a value play with strong dividend support despite a softer operational backdrop in 1Q25.
• Investors should monitor macroeconomic developments, policy changes, and corporate actions for new catalysts and risks in the months ahead.