Market View Update

4 sectors to watch amid MTI’s 1-3% GDP growth forecast for 2025

Straits Times Index (Daily)

• Our STI year-end target of 3,750 (11.8X, -1SD FY25 PE) is validated by the 17% rally over the past 3-4 months
• MTI lifting the 2024 GDP forecast to 3.5% (prev. 2-3%) provides strong support for the benchmark at the current level
• Favourable seasonal strength ahead is tempered somewhat by uncertainty over Trump’s initial salvo of policy maneuvers post inauguration on 20 January 2025
• Maintain our YE target of 3,750 and 1H25 target of 3,850
• MTI projects Singapore GDP growth at around 3.5% for 2024 and 1-3% for 2025

- 2024 GDP forecast raised to around 3.5%, from 2-3%, driven by 1) resilient external demand outlook, and 2) recovery in global electronics demand

- DBS Economists’ current GDP forecasts are at 3.5% for 2024, and 2.8% for 2025

- NODX growth forecast cut to 1% (from 4-5%) in 2024, but should pick up to 1-3% growth in 2025

• #1) Technology stocks to benefit from continued expansion in the electronics cluster, driven by recovery in end-markets and rising AI-adoption -> picks: AEM Holdings, Grand Venture
• #2) Robust orderbook of industrial stocks in the aerospace and marine & offshore engineering cluster provide revenue/earnings visibility -> picks: ST Engineering, Seatrium
• #3) Expectation for healthy growth for the info comms and finance sectors underpins banks and telcos -> picks: UOB, Singtel, StarHub
• #4) Cautious on stocks with retail exposure, as increased local outbound travel may weigh on retail trade and F&B sector growth -> e.g., retail REITs FCT, LREIT

Stocks to Watch

ThaiBev

Recovery signals re-rating

• FY24 earnings came in at THB27.2bn, -1% y/y compared to restated FY23 earnings, roughly in line
• Expect margins to expand for Spirits and Beer segments as raw material costs normalise
• Declared final dividend of THB0.47, a 4% y/y increase despite lower earnings, signalling commitment to improve shareholder returns
• Maintain BUY with unchanged TP of SGD0.77

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Note: All views expressed are current as at the stated date of publication.