Broker Name: Lim & Tan Securities
Date of Report: 24 July 2025

Singapore Market Update: Civmec Secures Major Contracts, OUE REIT Delivers Growth, and Top Institutional Moves – July 2025

Market Overview: Strong Gains Amid Tariff Deals and Corporate Earnings

Global equities continued their positive momentum, supported by robust US corporate earnings and continued progress on tariff negotiations. The FSSTI Index surged to 4,231.3, marking a 6.7% month-to-date (MTD) gain and an impressive 11.7% year-to-date (YTD) increase. Major indices in the US, UK, Japan, and Hong Kong also posted significant advances, with the Hang Seng Index (HSI) soaring 27.3% YTD.

Commodities also displayed mixed trends: gold rose 29.2% YTD, crude oil slid 7.5%, while the Baltic Dry Index more than doubled, up 104.1% YTD. The Singapore 10-year bond yield stood at 2.1%, down 26.8% YTD.

Civmec Limited: New Contracts Drive Order Book Above AUD 1 Billion

Civmec Limited (SGX: P9D, S\$0.935, up 0.5 cents) has announced a series of new contract awards and extensions with a total value exceeding A\$600 million, underscoring its strategic focus on sustainable growth and orderbook diversification.

• Key highlights include the addition of the SEA1180 program after acquiring Luerssen Australia, strengthening Civmec’s presence in Australia’s maritime defence sector. The company will now oversee the completion of the remaining Offshore Patrol Vessels, reinforcing its commitment to naval shipbuilding and sustainment initiatives.
• Chairman James Fitzgerald emphasized the synergy of the Luerssen acquisition, highlighting the drive to build sovereign capability and deliver efficient shipbuilding solutions.

Major Contract Wins

• Cape Lambert Port A – High Density Ores (CLAHDO) Upgrade (Rio Tinto): Civmec’s maintenance division was awarded the upgrade of six balance machines at Rio Tinto’s Cape Lambert Port A to handle high-density ore. The project will be delivered in eight planned shutdowns through 2026, involving procurement, fabrication, SMP (structural, mechanical, piping), and E&I (electrical & instrumentation) works, mainly at Civmec’s Henderson facility.
• Fortescue Green Iron Plant: Civmec will install civils and SMPE&I for Fortescue’s Christmas Creek Green Iron Project, part of Fortescue’s Green Energy Hub in Western Australia. This initiative supports Fortescue’s green metal production technologies, with first output expected in FY2026.
• Perth Sporting and Entertainment Precinct Project: Civmec was named preferred proponent for the planning and design of this landmark project, further cementing its role in reshaping Perth’s infrastructure landscape.

Financial Outlook

Despite the sizable contract wins lifting its order book above AUD 1 billion, Civmec expects FY2025 full-year earnings (to be released August 2025) to remain weak due to a gestation period over the past six months:

• Q4 FY2025 earnings are projected at AUD 8 million, down 50% year-on-year.
• Full-year earnings forecast is AUD 43 million, a 33% year-on-year decline.

The broker maintains an “Accumulate” rating on Civmec, expecting recovery in the subsequent year post-results release.

OUE REIT: Defensive Portfolio Powers Distribution Growth Despite Headwinds

OUE REIT (SGX: TS0U, S\$0.31, unchanged) reported a 5.4% year-on-year increase in Distribution per Unit (DPU) to 0.98 Singapore cents for 1H 2025, driven by resilient performance and disciplined capital management. Excluding capital distributions from 1H 2024, core DPU rose 11.4% year-on-year.

Key Financials for 1H 2025

• Revenue: S\$131.1 million (-10.6% YoY)
• Net Property Income (NPI): S\$105.3 million (-10.1% YoY)
• Declines were mainly due to the absence of Lippo Plaza Shanghai contributions. On a like-for-like basis, revenue and NPI dipped by 2.7% and 2.0% YoY, respectively.
• Share of joint venture results surged 41.0% YoY to S\$6.3 million.

Segment Performance

• Commercial (Office & Retail): Revenue was S\$86.1 million (+3.6% YoY), NPI at S\$65.2 million (+5.1% YoY). Singapore office portfolio occupancy was high at 95.5%, while Mandarin Gallery recorded 99.0% occupancy and a 34.3% rental reversion in 2Q 2025. Average passing rent increased 2.7% QoQ to S\$22.22 psf/month, up 1.2% from pre-pandemic levels.
• Hospitality: Revenue and NPI dropped 12.9% and 11.7% YoY to S\$45.0 million and S\$40.2 million. RevPAR for the segment was S\$233, with Crowne Plaza Changi Airport’s RevPAR up 4.8% YoY to S\$239, while Hilton Singapore Orchard’s RevPAR moderated to S\$230 due to a higher comparative base and increased central area hotel supply.

Balance Sheet and Outlook

• Aggregate leverage: 40.3% (down 30bps from March 2025)
• Weighted average debt cost: 4.2% per annum
• Weighted average debt term: 2.7 years; 71.1% of debt is hedged
• Manager to receive 50% of base fees in units, aligning with long-term DPU sustainability

OUE REIT now has a fully Singapore-based portfolio of quality retail, office, and hospitality assets, with a market cap of S\$1.7 billion, trading at 0.54x P/B and a 6.3% annualized yield. Consensus target price is S\$0.33, implying a 6.5% upside. The broker maintains an “Accumulate” rating.

Dividend Announcements and Upcoming Corporate Actions

Institutional and Retail Flows: Key Buys and Sells

During the week of 7 July 2025, institutional investors registered a net buy of S\$87.3 million (down from S\$213.3 million the previous week), while retail investors net sold S\$325.5 million.

Key Share Transactions and Buybacks

Several significant acquisitions and disposals were recorded from 1 July to 23 July 2025:

• ISO Team: Ginko AGT Global Growth Fund bought 5,986,800 shares, raising its stake to 5.24%
• Rex International: American Investment Century Inc purchased 2,436,200 shares, now holding 5.01%
• Indofood Agri Resources: PT Indofood Sukses Makmur Tbk acquired 9,056,200 shares, bringing its stake to 85.87%
• Singapore Shipping Corp: Ow Chio Kiat bought 2,500,000 shares, increasing holdings to 44.39%

Prominent share buybacks included UOB (200,000 shares at \$37.00), DBS (350,000 shares at \$46.18), and Olam (250,000 shares at \$0.99).

Sector Fund Flow Analysis

Institutional flows by sector (week of 7 July 2025):

• Strong net buys in Technology (Hardware/Software) (+S\$103.0M) and Telcos (+S\$8.6M)
• Significant net sells in REITs (–S\$50.9M) and Materials & Resources (–S\$25.3M)
• Financial Services continued to see net outflows (–S\$25.0M)

Retail flows were concentrated in REITs (+S\$88.7M net buy), while Financial Services faced heavy net selling (–S\$222.6M).

Highest Dividend Yields, Lowest Valuations in the FSSTI Universe

SGX Watch-List: Latest Companies Under Review

The SGX watch-list now includes 32 companies, with recent additions such as Addvalue Technologies, Renaissance United, Telechoice, Tiong Seng Hldgs, Global Invacom Group, Green Build Technology, Keong Hong, and Camsing Healthcare.

Macro Market Themes: US, Hong Kong, and China

• US: Job market resilience is waning, with leading indicators signaling caution. BCA Research suggests reducing risk exposure and overweighting government bonds.
• China/HK: Chinese agriculture is undergoing digital transformation as farmers adopt livestreaming to reach new markets amid declining offline demand and broader economic shifts. Rural revitalization remains a priority, with technology-enabled “new farmers” gaining traction on social media platforms.

What’s Ahead: Key Results and Events Calendar

A lineup of major earnings and dividend events is scheduled for the remainder of July and August 2025, including results from Keppel DC REIT, SIA, UOB, Wilmar, City Developments, and many others.