PSR Weekly Market Outlook 5 Min Summary

Dated: 13/04/2026         Source: https://youtu.be/B-w_hfigE5E 

 

Presentation Summary

Macro Outlook and Strategy

The current market is described as a "fork of war" due to the conflict involving Iran, leading to a strategy focused on capital preservation. While there is a risk of industrial shutdowns if oil supplies are disrupted, the team identifies a global "Build Build" (building) theme characterized by a massive CAPEX cycle. This cycle is driven by:

• AI Infrastructure: Significant spending by hyperscalers on data centers.
• Semiconductors: A projected 30% jump in equipment spending to support AI needs.
• Defense & Energy: Accelerating global defense spending and a shift toward national energy security, such as sustainable aviation fuel.

Sector Summaries and Stock Picks

• Banking: The "higher for longer" interest rate environment is viewed as beneficial for banks, as it helps offset margin compression. Exposure to the Middle East is considered small and well-contained.
• Stock Picks: DBS is favored for its fixed dividend per share and capacity to increase payouts through 2027. OCBC is noted for its resilient earnings, excess capital, and potential for special dividends.
• REITs and Property: The team is selective, favoring REITs with strong balance sheets and low leverage. Higher utility costs from oil prices are expected to impact the hospitality sector most severely.
• Stock Picks: Cromwell European REIT is recommended for its CPI-linked rental indexation. Prime US REIT is highlighted for its high cash visibility from long-term committed leases. City Developments Limited (CDL) remains a pick due to strong take-up rates for its luxury property launches.
• Maritime: Coverage was initiated on Yangzijiang Maritime, a maritime investment platform benefiting from a 15-year high in vessel prices and an accelerating transition into a maritime fund business.
• Small and Mid-Caps: Several companies are positioned to benefit from specific industrial trends:
• Construction & Infrastructure: Ever Glory (M&E services), BRC Asia (steel rebar), and Pan-United (ready-mix concrete) are expected to see volume expansion driven by major Singapore projects like Terminal 5 and HDB developments. Wee Hur is favored for its worker dormitory capacity.
• Energy & Resources: Geo Energy is targeting a "trifecta" of earnings drivers including rebounded coal prices and new transport infrastructure. CNMC Gold Mine is noted for its cost discipline and transition to higher-grade underground mining.
• Technology & Healthcare: Frencken is expected to see a 2H revenue ramp-up in semiconductor components. Q&M Dental is pursuing an aggressive M&A strategy, particularly in Australia. iX Biopharma recently secured US Department of Defense funding for its wafer-based pain management technology.

Model Portfolio Updates

The model portfolio, which was up 7.5% at the time of the presentation, saw one major change: Singtel was removed and Sembcorp Industries was added. Sembcorp was selected due to its gas trading potential amidst the Iranian conflict, its large acquisition in Australia, and the potential listing of its renewable energy portfolio.

 

Q&A Session

Banking and Finance

• DBS: Identified as the primary beneficiary of a "flight to safety" due to its established position in Singapore. Analysts believe DBS has the capacity to continue increasing its quarterly dividend by 6 cents through the third quarter of 2027, supported by excess capital (CET1 ratio target of 14%) and resilient earnings.
• OCBC: Highlighted for its high capital accrual rate (50%) and $2.3 billion in excess capital. While the bank aims for a 14% CET1 ratio, it has yet to announce specific plans to lower its current 15.1% ratio through dividends or buybacks.
• UOB: Mentioned as currently focusing on buffering its provision coverage.
• Yangzijiang Maritime: The analyst clarified that the focus is on growing maritime funds rather than high dividends, expecting a dividend yield below 2% based on a 40% payout of PATMI.

REITs and Property

• Keppel DC REIT: Anticipating 5.3% DPU growth in FY26, driven by recent acquisitions and potential "tax transparency" for certain assets. Rental reversions in Singapore remain a core growth driver.
• Suntec REIT: Performing well due to its strong Singapore portfolio and potential "portfolio recomposition" following a change in manager ownership to an entity controlled by Mr. Gordon Tang.
• Mapletree Logistics Trust (MLT): Analysts suggest the stock has bottomed as China rental reversions, which were previously double-digit negative, are starting to stabilize.
• United Hampshire US REIT: Retains a "buy" rating with a 9% yield due to its resilient grocery-anchored portfolio and high tenant retention.
• Manulife US REIT: Remains under pressure with weak occupancy (60%+); it needs to complete one more divestment (the Figueroa property) to exit its restructuring agreement.
• Mapletree Industrial Trust: Facing drags from the non-renewal of North American data center leases, which represent about 5% of its portfolio.
• Wee Hur: Viewed positively due to the likelihood of lease extensions for its 16,000 worker dormitory beds, which meet new 2030 standards.

Industrial and Small/Mid-Caps

• Ever Glory vs. King Wan: Ever Glory is considered superior due to its larger scale (10x larger) and ability to secure high-value infrastructure projects like airport runway lights, whereas King Wan focuses on smaller HDB electrical systems.
• China Aviation Oil (CAO): Despite a 60% jump in profit, a special dividend is unlikely as the company prefers to keep a cash buffer for oil price volatility and future M&A in storage and sustainable aviation fuel (SAF) infrastructure.
• Frencken: Recommended over AEM for direct semiconductor exposure, as its customer base includes major players like ASML and Applied Materials.
• Geo Energy: The completion of its new road (80% done) is the key catalyst to watch, as it will allow the company to double production and begin collecting barging and toll fees.
• Q&M Dental: Preferred for its aggressive expansion into the Asia-Pacific region (Australia) via a "roll-up" strategy, with earnings potentially jumping from $20 million to $40 million post-acquisition.
• Nordic Group: Approximately 20% of its revenue now comes from the defense sector, with another 12% from shipping.
• CSE Global: remains a positive play on data center infrastructure (switchboards), though analysts noted a risk of project cancellations in the US.

Other Mentions

• SIA: Viewed as more resilient than other carriers due to its fuel hedging strategy, though rising oil prices remain a sector-wide headwind.
• Genting Singapore: Described as a longer-term play, with major catalysts not expected until 2029/2030 when RWS 2.0 and Sentosa redevelopment are finished.
• Sheng Siong: Currently viewed as expensive at roughly 30x PE.
• Marco Polo Marine & Pacific Radiance: While impacted by geopolitical risks, they benefit from high demand for offshore support vessels in the renewables sector, such as Taiwan wind farms.