Broker: UOB Kay Hian
Date of Report: August 5, 2025

Singapore Tech Manufacturing Stocks: Top Picks, Outlook & Key Catalysts for 2025

Singapore Tech Manufacturing Sector: Riding the EQDP Wave with Selective Winners

Singapore’s tech manufacturing sector is in focus as the Monetary Authority of Singapore’s S$5 billion Equity Market Development Programme (EQDP) continues to drive positive sentiment. While the sector has rallied impressively this year, UOB Kay Hian advises investors to remain selective, emphasizing stocks with robust fundamentals and strong earnings visibility. The valuation gap versus Malaysian peers remains substantial at 35-40%, signaling further potential upside for well-positioned Singaporean names.

Sector Overview: Growth Drivers and Positive Catalysts

The best-performing Singapore tech manufacturing stocks have surged 30-50% year-to-date, buoyed by the EQDP and a global semiconductor upcycle.
Only three out of seven covered stocks are projected to post healthy earnings growth in the upcoming results: Frencken, UMS, and Valuetronics.
Recent positive earnings and guidance from global semiconductor giants such as Lam Research, ASML, and Applied Materials reinforce the positive outlook for Singapore’s leading suppliers.

Industry Tailwinds: Semiconductor Industry Momentum

• The US has relaxed chip restrictions, allowing Nvidia to sell H20 AI chips to China.
• TSMC reported a 61% year-on-year jump in 2Q25 earnings and expects full-year revenue to rise 30%, driven by advanced technology and AI demand.
• Samsung signed a US\$16.5bn chip supply deal with Tesla.
• US import tariff exemptions for Malaysian semiconductor products remain in place.

These developments offer a supportive backdrop for Singapore-based component makers, particularly those with exposure to semiconductors and AI.

Top Tech Manufacturing Stock Picks for 2025

Frencken Group (FRKN SP) – BUY | Target Price: S$2.08

• Earnings Momentum: Expected 2Q25 net profit of S\$10m (+10% year-on-year), driven by strong semiconductor segment demand and gross margin expansion via a better product mix.
• Revenue Outlook: 1H25 revenue is expected to grow moderately versus 2H24. Segmental guidance: semiconductor and medical – higher revenue; analytical life sciences and industrial automation – stable; automotive – lower.
• Valuation: Target price set at S\$2.08, based on 21x 2026F PE (2SD above mean), reflecting semiconductor cycle recovery and Frencken’s competitive manufacturing footprint.

UMS Holdings (UMSH SP) – BUY | Target Price: S$1.73

• Order Book Strength: On track to report S\$11m in 2Q25 earnings (+12% year-on-year and quarter-on-quarter), underpinned by new customer orders and stable demand from existing clients.
• Operational Recovery: 2Q25 will see revenues pick up after resolving 1Q25 supply disruptions.
• Strategic Moves: UMS is benefiting from strong order flows as key customers shift supply chains to Asia. The dual-listing exercise is expected to trigger a valuation re-rating.
• Valuation: Target price of S\$1.73, based on 23x 2026F PE (2SD above historical mean), still at an 8% discount to Malaysian peers. UMS also boasts superior dividend yield and net margins versus regional competitors.

Valuetronics (VALUE SP) – BUY | Target Price: S$0.83

• Financial Performance: FY25 revenue increased 4% year-on-year; PATMI up 7% (96%/100% of full-year forecasts).
• Margin and Earnings Quality: 2HFY25 PATMI rose 3% to HK\$80m, with an 11% revenue lift and improved margins, partially offset by lower interest income and minor fair value losses.
• Growth Drivers: Contribution from four new customers and an upcoming JV will strengthen future earnings. Valuetronics offers a 53% net-cash-to-market-cap ratio and a 6.8% FY26 dividend yield.
• Valuation: Target price of S\$0.83, based on 11x FY26 PE (1SD above historical mean). The stock trades at just 3x FY26 ex-cash PE.

Other Covered Singapore Tech Stocks: Ratings and Analysis

Venture Corp (VMS SP) – HOLD | Target Price: S\$12.01

• Projected 2Q25 earnings: S\$57m (-11% year-on-year), reflecting client uncertainty amid tariff and geopolitical headwinds.
• Valuation: Target price S\$12.01, at 15.3x 2025F PE (long-term mean). Dividend yield is a healthy 6.7%.

Aztech Global (AZTECH SP) – HOLD | Target Price: S\$0.58

• 2Q25 net profit: S\$15m (-53% y-o-y, +873% q-o-q), beating expectations on a sharp quarterly rebound. 1H25 earnings reached 73% of full-year estimate.
• Margins improved to 10.2% (+6.6ppt q-o-q). Target price S\$0.58, pegged to 12x 2026F PE (+2SD of long-term band).

AEM Holdings (AEM SP) – SELL | Target Price: S\$1.09

• 2Q25 earnings expected at S\$7m (versus S\$1.4m loss in 2Q24), mainly from front-loaded orders.
• Significant production ramp-up is not in sight; orders from new customers in 2025 may not yield attractive margins due to limited operating leverage.
• Target price S\$1.09, based on 15x 2025F PE (1SD above historical mean) to reflect trough cycle conditions.

Nanofilm Technologies (NANO SP) – SELL | Target Price: S\$0.46

• 1H25 earnings expected at S\$4m (versus S\$4m loss in 1H24), driven by revenue growth and absence of major start-up costs.
• Net margin remains soft due to an elevated cost base and lack of robust revenue growth. Target price S\$0.46, at 23x 2025F PE (-0.5SD to historical mean).

Sector Catalysts and Risks

• Capex increases from global tech manufacturers bode well for upstream suppliers.
• Positive surprises in 2Q25 sales and profit could re-rate the sector further.
• Risks include a potential global recession reducing electronics demand, and escalating US-China geopolitical tensions.

Peer Comparison: Singapore, Malaysia, and Global Semiconductor Players

Key Takeaways for Singapore Tech Manufacturing Investors

• The sector is on a strong footing, but performance will be driven by selective winners with clear earnings growth and catalysts.
• Frencken, UMS, and Valuetronics are the top picks for exposure to the semiconductor upcycle and sector-specific tailwinds.
• Venture and Aztech are rated HOLD due to mixed outlooks and sector uncertainties.
• AEM and Nanofilm are rated SELL as earnings recovery is expected to lag amid operational and margin headwinds.
• Investors should monitor global semiconductor trends, capex announcements, and trade policy developments for sector direction.

Conclusion

Singapore’s tech manufacturing sector presents attractive opportunities, particularly among companies with strong semiconductor and AI exposure. With supportive industry trends and government initiatives, selective stock picking remains crucial for maximizing returns in this dynamic space. Frencken, UMS, and Valuetronics stand out as the best-positioned names for outperformance in 2025.