Lim & Tan Securities

25 April 2025

Geo Energy Resources: Poised for Growth with Strategic Infrastructure Investment – A Deep Dive

FSSTI Index Overview

The FSSTI Index closed at 3,831.9, showing no change (0.0%) for the day, a -3.5% change month-to-date (MTD), and a 1.2% change year-to-date (YTD). Other key indices include: [[1]]

• INDU Index: 40,093.4 (1D: 1.2%, MTD: -4.5%, YTD: -5.8%)
• SPX Index: 5,484.8 (1D: 2.0%, MTD: -2.3%, YTD: -6.7%)
• CCMP Index: 17,166.0 (1D: 2.7%, MTD: -0.8%, YTD: -11.1%)
• UKX Index: 8,407.4 (1D: 0.1%, MTD: -2.0%, YTD: 2.9%)
• NKY Index: 35,039.2 (1D: 0.5%, MTD: -1.6%, YTD: -12.2%)
• HSI Index: 21,909.8 (1D: -0.7%, MTD: -5.2%, YTD: 9.2%)
• SHCOMP Index: 3,297.3 (1D: 0.0%, MTD: -1.2%, YTD: -1.6%)
• VIX Index: 26.5 (1D: -7.0%, MTD: 18.8%, YTD: 52.6%)

The daily market value was S\$1,586.1 million, with a daily market volume of 1,176.8 million shares. The 52-week high for the STI was 4,005.2, and the low was 3,198.4. [[1]]

Key Interest Rates

• 3 Mth SGD SORA: 2.4 (1D: -0.4%, MTD: -4.7%, YTD: -20.5%)
• SG 10 YR Bond Yield: 2.5 (1D: 0.4%, MTD: -5.6%, YTD: -11.4%)
• US 10 YR Bond Yield: 4.3 (1D: -1.5%, MTD: 2.6%, YTD: -5.6%)

US Futures

• Dow Jones: 40,263.0 (1D: 0.0%, MTD: -4.7%, YTD: -5.8%)
• S&P 500: 5,530.8 (1D: 0.4%, MTD: -2.2%, YTD: -7.7%)
• NASDAQ: 19,420.3 (1D: 0.5%, MTD: -0.1%, YTD: -9.5%)

Commodities

• Gold: 3,351.5 (1D: 0.1%, MTD: 7.3%, YTD: 27.7%)
• Crude Oil: 63.6 (1D: 0.9%, MTD: -11.1%, YTD: -11.4%)
• Baltic Dry: 1,300.0 (1D: 3.1%, MTD: -18.6%, YTD: 30.4%)
• Crude Palm Oil: 4,059.0 (1D: 0.6%, MTD: -5.9%, YTD: -1.0%)

Market Movement

On Thursday, the S&P 500 increased by 2.0%, the tech-heavy Nasdaq composite rose by 2.7%, and the Dow Jones increased by 1.2%. [[1]]

Idea of the Day: Geo Energy Resources (Geo)

Geo Energy Resources (Geo) is highlighted as a coal-mining company set to benefit from upcoming infrastructure developments. The report forecasts a tripling of EBITDA levels from US\$60 million in FY24 to US\$168 million in FY26F upon completion of a state-of-the-art infrastructure development. [[1]]

Strategic Infrastructure Investment

Geo’s US\$150 million investment in a new 92 km hauling road and a jetty is expected to yield significant returns once completed in 1H26. This includes:

• More efficient transportation using trucks that can carry three to four times the current load.
• Faster and safer navigation compared to the existing route.
• A new recurring revenue stream by leasing infrastructure to other miners in the region.

Increased Coal Sales and Production

The company is targeting total coal sales of 10.5-11.5 million tonnes in 2025, a 33%-46% year-over-year increase. The newly acquired TRA coal mine contributed 1.1 million tonnes in FY24. Geo acquired an additional 15% of TRA at a 12.5% discount in Mar’25, bringing its total effective interest to 75.1%. Production volumes are projected to increase to 25 million tonnes by FY29. [[2]]

Sustained Coal Demand in China

Despite China’s commitment to renewable energy, the country remains reliant on coal imports from Indonesia due to the lower quality of its domestic coal. The report anticipates sustained demand and price for quality coal, benefiting Geo, whose largest customer base is in China. [[3]]

Investment Recommendation

The report initiates a BUY recommendation on Geo Energy Resources with a target price (TP) of S\$0.60, based on a Discounted Cash Flow (DCF) analysis with a Weighted Average Cost of Capital (WACC) of 12.5%. Key tailwinds include: [[3]]

• Expected increase in 2025 coal sales
• Addition of coal reserves
• Strategic infrastructure investment for long-term growth
• Attractive valuations with dividend returns

The FY25F net profit estimate is US\$63.0 million (+68% yoy). Geo trades at 5.9x forward P/E and 0.8x P/B, with a FY25F/FY26F dividend yield of 5.1%/7.4%, respectively. [[4]]

Other Highlights

Highest Consensus Forward Dividend Yield (%)

• DBS BANK: 7.11
• FRASERS LOGISTICS TRUST: 7.00
• MAPLETREE INDUSTRIAL TRUST: 6.80
• MAPLETREE LOGISTICS TRUST: 6.72
• VENTURE CORP: 6.68

Lowest Consensus Forward P/E (X)

• YANGZIJIANG SHIPBUILDING: 6.51
• JARDINE CYCLE & CARRIAGE: 7.35
• JARDINE MATHESON: 7.57
• SINGAPORE AIRLINES: 8.68
• UOB BANK: 9.56

Lowest Trailing P/B (X)

• HONGKONG LAND: 0.31
• UOL GROUP: 0.42
• JARDINE MATHESON: 0.44
• CITY DEVELOPMENTS: 0.51
• MAPLETREE PAN ASIA COMM TRUST: 0.70

Lowest Trailing EV/EBITDA (X)

• YANGZIJIANG SHIPBUILDING: 3.22
• GENTING SINGAPORE: 5.78
• JARDINE CYCLE & CARRIAGE: 5.96
• DFI RETAIL GROUP: 6.32
• SATS: 8.21

Suntec REIT Analysis

Suntec REIT (\$1.16, down 1 cent) reported improved distributable income of \$45.9 million for 1Q 25, a 4.3% increase year-over-year. Distribution per unit (DPU) to unitholders was 1.563 cents, 3.4% higher year-on-year. [[5]]

All properties, except for 55 Currie Street, Adelaide, showed stronger operating performance. The improved distributable income was due to better performance and lower financing costs. [[5]]

Mr. Chong Kee Hiong, CEO of the Manager, noted strong operating performances in the Singapore Office, Retail, and Convention sectors, as well as the UK portfolios. Financing costs for the REIT also declined due to refinancing efforts in FY24 and debt reduction from the divestment of strata office units. [[5]]

Suntec REIT completed \$730 million in refinancing due in 2025 and 2026, expected to result in approximately \$1.8 million in annual interest savings. [[6]]

The interest rate easing cycle is expected to be gradual for major economies. Refinancing of debt due in 2025 is expected to be completed in the first half of 2025, with all-in financing costs remaining elevated at approximately 4.0% based on current interest rates. [[6]]

Cautious demand is expected for office spaces due to weaker business sentiments. Positive rent reversion is expected to be modest, in the range of 1% to 5%. The Singapore office portfolio is expected to remain stable, supported by healthy occupancies and robust rent reversions from past quarters. [[6]]

Committed occupancy is expected to remain above market level with positive rent reversion moderating. The weakened economic outlook weighs on retailers, who expect subdued retail sales due to cautious consumer spending. Stable performance is expected at Suntec City Mall, supported by high committed occupancy and past quarters of positive rent reversions. [[6]]

Long-term MICE growth in Singapore is expected with strong support from the Singapore Tourism Board as part of the Tourism 2040 roadmap. However, the global uncertainty may lead to lower event attendees and reduced budgets. The performance of Suntec Convention is expected to be stable. [[7]]

Office market vacancies in Melbourne and Adelaide CBD are expected to remain elevated with incentive levels continuing to be in the range of 40% to 45%. Demand in Adelaide continues to be driven by a flight to quality, with preference for premium grade new developments. [[7]]

The performance of the Australia portfolio is expected to remain stable, supported by the Sydney and Melbourne properties with occupancies above market levels. [[7]]

Weakening business sentiments are likely to impact demand for office space. However, occupancy and rent growth in Central London are expected to be supported by tight supply and an increase in office utilization. The United Kingdom Portfolio is expected to be stable, with the portfolio committed occupancy remaining healthy and long WALE. [[7]]

Suntec REIT’s market cap stands at S\$3.4 billion and currently trades at 0.6x PB, with a dividend yield of 5.4%. Consensus target price stands at S\$1.25, representing an 8% upside from the current share price. [[8]]

The report maintains a HOLD recommendation on Suntec REIT, citing a small upside to consensus but a decent yield of 5.4% and potential for another offer after the black-out period is over. [[8]]

FSSTI Stock Selection

Highlights of FSSTI stock selection include: [[8]]

• Highest Consensus Forward Div Yield (%): DBS Bank (7.11), Frasers Logistics Trust (7.00), Mapletree Industrial Trust (6.80), Mapletree Logistics Trust (6.72), Venture Corp (6.68).
• Lowest Consensus Forward P/E (X): Yangzijiang Shipbuilding (6.51), Jardine Cycle & Carriage (7.35), Jardine Matheson (7.57), Singapore Airlines (8.68), UOB Bank (9.56).
• Lowest Trailing P/B (X): Hongkong Land (0.31), UOL Group (0.42), Jardine Matheson (0.44), City Developments (0.51), Mapletree Pan Asia Comm Trust (0.70).
• Lowest Trailing EV/EBITDA (X): Yangzijiang Shipbuilding (3.22), Genting Singapore (5.78), Jardine Cycle & Carriage (5.96), DFI Retail Group (6.32), SATS (8.21).

Macro Market News Affecting US, Hong Kong, and China Markets

China/HK: Nike’s New Creative Studio in Shanghai

Nike is opening a new creative studio in Shanghai, named Icon Studios, to create content for e-commerce, social media, and live streaming. This investment aims to get closer to Chinese shoppers and recapture market share. [[9]]

Nike has been adding new facilities in China, including a technology center in Shenzhen and a sports research lab in Shanghai. In fiscal 2024, China accounted for US\$7.5 billion in annual revenue, or 15% of global sales, down from 19% in fiscal 2021. [[9]]

Elliott Hill, Nike’s CEO, visited China late last year and stated that the company is “making product of China, for China.” Shanghai is one of Nike’s five key cities, alongside Beijing, New York, Los Angeles, and London. Jason King, a former Apple marketing executive, is leading Icon for Nike in Shanghai. [[10]]

The management plans to add about two dozen employees to the group. The in-house production studio will deliver “China-right’ creative content at speed and scale”. [[10]]

US: BCA Research on Small Business Sentiment

BCA Research indicates that the sharp drop in March’s NFIB survey reinforces a defensive asset allocation due to weakening small business sentiment amid rising policy uncertainty. They remain overweight government bonds and underweight risk assets. [[10]]

The NFIB Small Business Optimism Index fell more than expected to 97.4 from 100.7, extending the post-election reversal in soft data. Confidence and hiring plans declined further, while price pressures moderated. [[11]]

Only a net 21% of respondents expect better business conditions in six months, down from 52% in December. BCA Research also maintains an overweight on gold within a commodity portfolio. [[11]]

Separately, BCA Research’s Global Fixed Income strategists continue to recommend long duration exposure, curve steepeners, and an underweight in corporate bonds relative to government bonds, as global recession risks rise. [[11]]

Trade-related disinflation opens a near-term window for global bonds to outperform Treasuries. Once US labor data weakens, Treasuries are expected to lead again, with ample room for rate cuts. [[12]]

Share Transactions (1 Apr’25 – 24 Apr’25)

Acquisitions

• Hyphens Pharma: Tan Kia King acquired 88,000 shares at \$0.285, new balance 86,770,759 (28.09%). [[13]]
• Valuemax: Yeo Hiang Nam acquired 284,100 shares at \$0.50, new balance 740,731,124 (85.02%). [[13]]
• Audience Analytics: Ng Yan Meng acquired 76,000 shares at \$0.28, new balance 191,387,000 (84.05%). [[13]]
• Singpost: Temasek (via DBS) acquired 300,000 shares at \$0.51, new balance 495,558,681 (22.01%). [[13]]
• UMS Integration: Catcher Tech Co Ltd acquired 950,000 shares at \$0.995, new balance 36,350,000 (5.12%). [[13]]
• Zixing: Thomas Clive Khoo acquired 5,110,000 shares at \$0.027, new balance 179,320,000 (11.28%). [[13]]
• Unionsteel Holdings Ltd: Ang Yew Chye acquired 45,000 shares at \$0.51, new balance 14,482,429 (12.26%). [[13]]

Disposals

• CNMC Goldmine: Choo Chee Kong disposed of 750,000 shares at \$0.38, new balance 37,217,500 (9.18%). [[13]]
• Singpost: Temasek (via DBS) disposed of 350,000 shares at \$0.55, new balance 495,225,194 (21.99%). [[13]]

Share Buyback

*5.2% of current buy back maximum mandate of 85,328,308 shares and *15.3% of DBS’ \$3billion buy back target absolute \$ mandate. [[14]]

Fund Flow Data

Institutional and Retail Net Buy/Sell Stocks (Week of 14 Apr)

Top 10 Institution Net Buy (+) Stocks (S\$M):

• Singtel (157.1)
• DBS (59.3)
• ST Engineering (38.9)
• UOB (37.2)
• SGX (28.8)
• ComfortDelGro (9.7)
• Frasers Centrepoint Trust (9.6)
• SIA (8.9)
• Seatrium (7.7)
• Keppel DC REIT (5.2)

Top 10 Institution Net Sell (-) Stocks (S\$M):

• Wilmar International (19.7)
• OCBC (17.3)
• Sembcorp Industries (7.6)
• CapitaLand Ascendas REIT (7.3)
• CapitaLand Investment (6.6)
• Venture Corporation (6.5)
• CapitaLand Integrated Commercial Trust (6.1)
• Yangzijiang Shipbuilding (5.6)
• Yangzijiang Financial (5.2)
• ESR REIT (5.0)

Top 10 Retail Net Buy (+) Stocks (S\$M):

• OCBC (29.0)
• Yangzijiang Shipbuilding (18.3)
• Wilmar International (7.8)
• Yangzijiang Financial (7.1)
• Keppel (6.5)
• SATS (5.1)
• Venture Corporation (4.8)
• Aztech Global (4.3)
• CapitaLand Investment (4.0)
• UOB (3.4)

Top 10 Retail Net Sell (-) Stocks (S\$M):

• Singtel (102.1)
• SGX (28.0)
• ST Engineering (25.1)
• DBS (15.8)
• Frasers Centrepoint Trust (10.4)
• SIA (9.6)
• ComfortDelGro (8.0)
• CapitaLand Ascendas REIT (7.7)
• Seatrium (6.1)
• Frasers Logistics & Commercial Trust (5.2)

Institutional investors net buy (+S\$273.0m) vs. (-S\$178.9m) a week ago. Retail investors net sell (-S\$161.8m) vs. (+S\$776.0m) a week ago. [[15]]

Institutional Investors Net Buy/Sell (S\$M) by Sector

Retail Investors Net Buy/Sell (S\$M) by Sector

STI Constituents – Week of 14 Apr

Dividends / Special Distributions / Others

(List is not exhaustive) [[17]]

• OCBC: 41 cts Final & 16 cts Special, Ex-Dividend: 25 Apr, Payable: 9 May
• Keppel Ltd: 19 ct Final, Ex-Dividend: 28 Apr, Payable: 9 May
• UOB: 92 cts Final & 25 cts Special, Ex-Dividend: 28 Apr, Payable: 13 May
• SCI: 17 cts Final, Ex-Dividend: 30 Apr, Payable: 13 May
• Mapletree Logistics Trust: 1.955 cts (Jan-Mar’25), Ex-Dividend: 30 Apr, Payable: 13 June
• Suntec REIT: 1.563 cts (Jan-Mar’25), Ex-Dividend: 2 May, Payable: 30 May
• City Dev: 8 cts Final, Ex-Dividend: 2 May, Payable: 20 May
• Intraco Ltd: 0.5 cents Final & 6 cts Capital Reduction, Ex-Dividend: 2 May, Payable: 15 May
• YZJ Shipbuilding: 12 cts Final, Ex-Dividend: 2 May, Payable: 13 May