Title: Market Shaping News and Top Equity Ideas Maybank Research Pte Ltd 14 March 2025

SingPost: Investing to Expand eCommerce Logistics Hub

[[1]] SingPost has announced a SGD30m investment to grow its regional eCommerce Logistics Hub facility and its processing capacity. The investment will see the installation of new sorting equipment which can process up to 300,000 small parcels per day, up from the current 100,000. This compact and modular design of the new machine will free up more floor space to enable future enhancements.
1 The group has also proposed to further consolidate mail with parcel operations under one roof to achieve greater efficiency. By mid 2026, it will vacate its e-commerce parcel sortation at Singpost centre and free up 83,000 sqft of NLA, which can generate additional SGD166k a month rental. When more mail operations are consolidated into its ecomm log hub at Tampines, more NLA can be freed up and it allows them to also be able to sell Singpost centre.
1 Separately, SingPost’s shareholders have voted in favor of the disposal of its Australian business, Freight Management Holdings (FHM) at an EGM held on 13 Mar. It received 99.90% vote in favor of the disposal to Pacific Equity Partners. Upon completion, SingPost will receive cash proceeds of AUD775.9m from the sale, which is the equity value of FHM after adjusting the enterprise value for debt carried. The group intends to utilize cash proceeds to repay its borrowings of AUD362.1m, and the expected gain on disposal of FHM will amount to about SGD289.5m for the financial year. Part of the proceeds will be set aside for a special dividend and an amount to be retained for reinvestment or further debt repayment.

Sembcorp Gas: Terminating Gas Sales Agreement

[[1]] Sembcorp Gas, a wholly-owned subsidiary of Sembcorp Industries (SCI) terminates its gas sales agreement (GSA) to import up to 111b British thermal units per day of natural gas piped from the Mako gas fields in Indonesia. SCI says that the GSA was subject to regulatory approvals, which had not been obtained. The GSA was first signed on 2 Sep 2024 with West Natuna Exploration, Empyrean Energy and Coro Energy Duyung (Singapore). However, SCI says the termination will not affect its energy costs or ability to meet gas supply requirements in Singapore, as it will continue to leverage its network of natural gas sources, including liquefied natural gas, to fulfill demand.

Top Equity Ideas

Frencken Group Ltd – Strong semi-con sales

[[1]] Our channel checks show that Frencken is benefiting from strong orders from its semi-con customers. We expect orders to increase by 30% from its European customer in 1H25. Hence we believe the outlook for 1H25 to be stronger than we initially expected and will likely benefit more if the highly anticipated semi-con recovery happens in 2H25. We raise our TP to SGD1.33 from SGD1.20, based on a blended 12x FY25/26E P/E. Frencken remains our Top Pick in the Singapore tech sector.

Sea Ltd – Firing on multiple cylinders

[[1]] After a strong 4Q24 and upbeat 2025 guidance, we raise our Adj. EBITDA estimates by 2-3% and lift our SoTP-based TP to USD174, rolling target multiples to 2026. We also increase target multiples for Ecom & Garena given superior growth. Reiterate BUY on SE, we see multiple tailwinds across segments, with AI as a boost. Despite a 4x share price rise since early 2024, valuations remain attractive, inline/below its peers, while growth stays at the high end, offering strong risk-reward.