DBS Stock Pulse: (1) Earnings season signals and Budget 2026 implications - Market Focus: Singapore February Outlook (2) Equity Picks – Trim GuocoLand and UMS Integration
Market View Update
Earnings season signals and Budget 2026 implications - Market Focus: Singapore February Outlook
- 6 stocks positive (SATS, OCBC, iFAST, Nam Cheong, UMS Integration, Bumitama Agri), 3 negative (UOB, PropNex, HL Asia) watch this earnings season
- 4 potential developments from Budget 2026
- AI -driven innovation (SingTel, Keppel DC REIT)
- Push towards advanced manufacturing (UMS, Frencken, AEM, Venture)
- Possible easing of property measures (APAC Realty)
- Possible moderation in cash handouts (Sheng Siong)
- 7 stocks positioned to ride the value-unlocking theme (City Dev, UOL, Singapore Land, Haw Par, GuocoLand, HPL, Thai Bev)
Trending Sector
Regional REITs
- Fed held steady as expected, but FOMC statement guidance for "additional adjustments" is unchanged, implying still ongoing easing cycle
- Regional REIT markets started the year with mixed performance in Jan; C-REITs (+4.2% m/m) as the outperformer on renewed fund inflows
- EQDP yet to become a multi-year catalyst for S-REITs; C-REITs to benefit from accelerating pace of asset injections; H-REITs commercial could see a two-way speed market
- Sector preference in office and industrial for S-REITs, retail for H-REITs and C-REITs, and industrial and hotels for TH-REITs
Stocks to Watch
Hongkong Land – TP (+)
- Launched its first private real estate fund, the Singapore Central Private Real Estate Fund, with AUM of SGD8.2bn at inception
- Hongkong Land is the fund’s single largest unitholder
- Share buyback programme upsized by USD300m to USD650m, with extension to end-Jun 2027
- Fund management strategy supports higher valuation; Maintain BUY with higher TP of USD10.13
Digital Core REIT – TP (+), Earnings (+)
Sustained earnings despite a challenging year
- FY25 DPU of 3.60UScts stable y/y despite vacancy at Linton Hall; slightly ahead of our previous estimates
- Linton Hall backfilling will drive a c.12.5% uplift in earnings in FY27
- FY26 earnings will be supported by organic income growth from higher occupancies and rents
- Reiterate BUY recommendation with a marginally higher TP of USD0.70
Keppel REIT – TP (-), Earnings (-)
Strength of Singapore portfolio to lead organic income growth
- Revenues and contribution from JV improved meaningfully y/y due mainly to the strong positive rental reversions of +11.5% in FY25
- Portfolio valuations on a same-store basis were c.3.4% higher y/y, driven by strong valuation uplift in Singapore
- FY25 DPU of 5.23Scts was slightly below our estimates as timing difference between the private placement and completion of acquisition in Sydney led to a slight drag in earnings
- Looking ahead, we expect a slight DPU dilution from the recently completed acquisition of the additional stake in MBFC Tower 3
- Maintain BUY recommendation with a slightly lower TP of SGD1.05
ESR REIT
Organic income growth will be key to core earnings
- FY25 DPU of 21.914Scts supported by core earnings growth; in line with our projections
- Healthy positive rental reversions of +11.7% reported in FY25
- Near-term fluctuations in earnings with ongoing divestments, but will lead to longer-term earnings stability and organic growth potential
- Maintain BUY with TP of SGD3.20
AIMS APAC REIT
Healthy rental reversions to complement occupancy uplift
- Topline driven by positive rental reversions and occupancy uplift; 9M26 DPU of 7.25Scts is in line with our projections
- Key positives: i) continued positive rental reversions of +8.5%, ii) overall financing costs improved to 4.1%, iii) maintained healthy gearing of 36.6%
- What we are watching out for: i) rental reversions are normalising down, ii) refinancing of AUD loan due in FY27
- Maintain BUY with unchanged TP of SGD1.60
CapitaLand China Trust
Lower DPUs for longer on watch
- Topline revenue declined 9% y/y to SGD303.7m due to Yuhuating divestment, ongoing AEIs, lower rents from new economy assets; DPU fell 15% y/y to 4.82 Scts (including 0.33 Scts divestment gain top up) and in line with our estimates
- Negative reversions persisted at -2% / -8% / -25% for retail / BP / logs, despite higher occupancy across all asset classes; Valuations held steadier than expected with a 0.8% decline in RMB terms
- Trading gap against NAV narrowed to 25% from 2025 lows of 45% while C-REIT asset securitization strategy remains a long term recovery path in our view
- Maintain HOLD; Current TP of SGD0.75 under review
SGX
- Delivered its strongest, record half-year revenue (SGD695mn, +7.6% y/y) as well as adjusted earnings (SGD357mn, +11.6%)
- Robust performance underpinned by strong growth in cash equities, currencies and commodities, partially offset by decline in treasury income
- Announced interim dividend of 21.75Scts (increase of 3.75Scts, vs. 18Scts in 1HFY25); management remains confident to grow dividend at 0.25Scts per quarter through FY28
- We currently have a BUY recommendation with TP SGD18.20
Singapore Equity Picks
UMS Integration: Reduce by 7,000 shares @ SGD1.30
We trim exposure by 8,000 shares as we further rebalance UMSH’s exposure in equity picks. UMSH remains our top pick in the Singapore technology space and is also among our SMC picks. We are watchful of potential weakness developing in the price action of the technology heavy US Nasdaq Index that may weigh on sentiment. We retain 21,000 shares in equity picks post reduction.
GuocoLand: Reduce by 3,800 shares @ SGD2.67
We trim exposure following the stock’s ‘quick gains’ of almost 13% since our recent addition. The stock reached close to our tactical objective of SGD2.80 yesterday. GuocoLand remains among our picks in the SMC space with value unlocking potential in the medium term. We retain 9,000 shares in equity picks post reduction.
Legend
| (+) | (-) |
Earnings | Positive earnings revision | Negative earnings revision |
Recommendation | Upgrade | Downgrade |
TP | Increase | Decrease |
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