UOB Kay Hian Research Report April 3, 2025

Singapore’s Stocks to Watch: Diverse Picks for Outperformance

Alpha Picks Portfolio Outperforms in March

Our Alpha Picks portfolio outperformed the Straits Times Index (STI) in March 2025, rising 3.4% on an equal-weighted basis and beating the STI by 1.4 percentage points. However, on a market cap-weighted basis, the portfolio underperformed the STI by 0.4 percentage point, though it still managed a respectable 1.6% gain.
For the first quarter of 2025, the STI rose 4.9% quarter-over-quarter, outpacing our Alpha Picks portfolio by 5.1 percentage points on an equal-weighted basis. This was largely due to the strong performance of the banking sector, which reported robust 2024 results.

Broad-Based Outperformance from Small-Mid Cap Picks

Our small-to-mid cap picks were the standout performers in March, led by Centurion (+26.3% month-over-month), China Sunsine (+14.7%), and UMS Integration (+8.8%). Stronger-than-expected 2024 results and higher dividends boosted Centurion and China Sunsine, while UMS Integration rose on the back of a better-than-expected outlook for 2025.
On the other hand, our underperformers included SIA Engineering (-8.8%), which was hurt by weak investor interest, Marco Polo Marine (-5.9%), impacted by shaky oil price sentiment, and Riverstone (-5.5%), affected by the fragile outlook for the glove industry.

Rebalancing the Alpha Picks Portfolio

As part of our portfolio rejigging, we are making the following changes:

Additions:

• Oiltek: Upcoming transfer to the SGX mainboard and new recurring revenue from a partnership with Pertamina • Valuetronics: New customer contributions and potentially better-than-expected results • DFI Retail: Earnings uplift from higher-margin businesses after selling its Singapore food business

Removals:

• ComfortDelGro, Centurion, and UMS Integration: Profit-taking after strong performance since their addition to the Alpha Picks portfolio • Riverstone: Lack of near-term share price catalysts

Key Recommendations

Sembcorp Industries (BUY, TP: S\$8.00)

– Reported better-than-expected 2024 results, with revenue of S\$6.4 billion (-9% year-over-year) and EBITDA of S\$1.7 billion (-3% year-over-year) – Announced acquisition of an additional 40% stake in Senoko Energy, implying a total enterprise value of S\$343 million – Maintain BUY rating with a target price of S\$8.00, based on a target PE multiple of 12.6x (1.5 standard deviations above the company’s 2018-2025 average)

Yangzijiang Shipbuilding (BUY, TP: S\$3.50)

– Unconcerned about the USTR’s proposed port fees for Chinese-built vessels entering US ports, as clients can easily pass on the costs – Expect the company to maintain its robust shipbuilding margins in 2025, with 2024 results showing a 62% year-over-year increase in PATMI to Rmb6.6 billion – Maintain BUY recommendation with a PE-based target price of S\$3.50, using a target PE multiple of 9.5x (1 standard deviation above the company’s 10-year average)

DFI Retail (BUY, TP: US\$2.80)

– Announced the sale of its Singapore food business, including Cold Storage and Giant, for S\$125 million – Expects 2% revenue growth in 2025 and an underlying profit of US\$230 million to US\$270 million, implying year-over-year earnings growth of 14-34% – Maintain BUY rating with a PE-based target price of US\$2.80, using a target PE multiple of 16.3x (1 standard deviation below the company’s average PE multiple from 2019 to present, excluding COVID-19 years)

Other Picks:

– PropNex (BUY, TP: S\$1.30): Missed 2024 estimates but investors should focus on the bright outlook for 2025 – SIA Engineering (BUY, TP: S\$2.70): Earnings recovery continues, with undemanding valuation and decent dividend yields – China Sunsine Chemical (BUY, TP: S\$0.63): Expect volumes to maintain an upward trajectory, with attractive dividend yield of around 6% – CSE Global (BUY, TP: S\$0.61): Healthy order win momentum supports revenue growth, with divestment of US facility to fund further expansion
For the full details and analysis on all the companies in our Alpha Picks portfolio, please refer to the attached UOB Kay Hian research report dated April 3, 2025.