Wee Hur Holdings Ltd (WHUR SP): Rate cut expectations
BUY Entry – 0.540 Target– 0.580 Stop Loss – 0.520
Wee Hur Holdings Ltd provides building construction services and acts as the management or main contractor in construction projects for both private and public sectors. The Company’s clients from the private sector include property owners and developers, and those from the public sector comprise government bodies and statutory boards.
Rate cut expectations. The U.S. bond market is signaling that the Federal Reserve may need to begin cutting interest rates, as evidenced by 2-year Treasury yields falling below the Fed’s policy rate. The spread between the Fed funds rate and 2-year yields—a key market gauge of future monetary policy—has steadily widened over the past two months. This shift reflects a growing consensus among fixed-income investors that the Fed will lower rates by a full percentage point this year, twice the most recent median forecast from Fed officials, amid signs of economic strain linked to President Trump’s escalating tariffs. Markets now anticipate a rate cut as early as June, with additional cuts likely in July or September, totaling three to four reductions by year-end. For Wee Hur Holdings, this environment of declining interest rates presents a potential tailwind: lower borrowing costs could enhance profitability and cash flow, while also creating opportunities to refinance existing debt at more favorable terms, further reducing financial expenses.
Increased construction demand in Singapore. As a BCA-registered A1-grade contractor, Wee Hur is well-positioned to tender for public projects of unlimited value, spanning residential, commercial, industrial, and conservation projects, further solidifying its expertise in the construction sector. The recent sale of its Australian PBSA portfolio has provided the company with additional capital flexibility, enabling it to focus on core segments like construction and dormitories. With Singapore’s construction demand projected to reach S$47bn to S$53bn in 2025, fuelled by major projects such as Changi Airport Terminal 5 and public housing developments, Wee Hur is poised to capitalize on these opportunities. Its diversified capabilities, including expertise in new constructions, refurbishments, and heritage restoration, further enhance its versatility and competitive edge in the market. These strengths position Wee Hur to thrive amid Singapore’s growing infrastructure and construction needs.
Capitalising on sale of assets. Wee Hur Holdings sold its Australian student accommodation assets for A$1.6bn to Greystar, generating S$320mn in cash and retaining a 13% stake worth A$200mn in the new venture. The portfolio, comprising over 5,500 beds, has benefited from high occupancy rates and rising rental income. Wee Hur intends to allocate the proceeds toward expanding its construction and engineering business and exploring alternative investment opportunities. The sale also enabled the company to clear associated debt, strengthening its financial position. Additionally, Wee Hur continues to advance other key projects, including the development of new worker dormitories and student accommodations. Looking ahead, investors are optimistic about the potential for special dividends once the company receives the net proceeds from the transaction, further enhancing shareholder value.
FY24 results review. Total revenue for FY24 fell by 10.7% YoY to S$200.8mn from S$224.8mn. Gross profit for FY24 rose to S$83.0mn, an increase of 54.9% YoY from S$53.6mn in FY23. Profit from continuing operations for FY24 was S$57.0mn, compared to S$160.2mn the year before.
Market Consensus.
(Source: Bloomberg)
OUE Real Estate Investment Trust (OUEREIT SP): Refocused, resilient and ready for growth
OUE Real Estate Investment Trust (OUE REIT) provides real estate investment services. The Company invests in income-producing real estate used primarily for retail, hospitality, and office purposes in financial and business hubs, as well as real estate-related assets. OUE REIT serves customers in Singapore and China.
Softer quarter on divestment and hospitality pullback. OUE REIT reported a YoY decline in revenue and NPI of 11.9% and 12.1% respectively for 1Q25. The lower figures reflect the absence of contributions from Lippo Plaza, following its divestment in December 2024, as well as a softer hospitality performance amid a more subdued trading environment compared to the previous year.
Strategic divestment. As of 27 December 2024, OUE REIT successfully completed the divestment of Lippo Plaza in Shanghai for a sale consideration of RMB1,917.0mn (S$357.4mn). This divestment will enhance portfolio resilience and provide financial flexibility for future growth.
Tourism-led tailwinds. The Singapore Tourism Board projects international visitor arrivals to reach between 17 and 18.5 million in 2025, with tourism receipts forecasted at S$29.0bn – S$30.5bn. A robust line-up of leisure events, including Lady Gaga’s four-night concert in May and the Formula 1 Grand Prix, alongside other performances are expected to boost inbound travel, supporting demand for OUE REIT’s centrally located hotels and retail assets.
Proactive debt management. Financing costs declined 11.3% YoY to S$22.6mn in 1Q25, supported by active refinancing and interest rate hedging. The weighted average cost of debt fell to 4.2% per annum, down from 4.7% in the prior quarter. A 25-basis-point drop in interest rates could further boost DPU by an estimated 0.03 Scents, offering additional upside.
1Q25 results review. Revenue and net property income (NPI) declining by 11.9% and 12.1% YoY to S$66.0mn and S$53.2mn, respectively. These declines were largely due to the divestment of Lippo Plaza and lower contributions from the hospitality segment. On a like-for-like basis, revenue and NPI fell by a more modest 3.9% and 4.1% YoY, underscoring the resilience of its Singapore portfolio.
We have fundamental coverage with a BUY recommendation and a TP of S$0.318. Please read the full report here.
Market consensus
(Source: Bloomberg)
Sea Ltd (SE US): Capitalising on Southeast Asia’s e-commerce boom
BUY Entry – 137 Target – 155 Stop Loss – 128
Sea Limited offers information technology services. The Company provides online personal computer and mobile digital content, e-commerce, and payment platforms. Sea serves customers worldwide.
Capital flowing to emerging markets. The recent weakness in U.S. stocks and the dollar reflects declining confidence in the “American exceptionalism” narrative, with capital gradually flowing into emerging markets. Southeast Asia has become a key beneficiary of this trend. As a leader in the region’s digital economy, the company is well-positioned to capitalize on the benefits of this capital reallocation. In a weaker dollar environment, non-dollar assets become more attractive, and the company’s deep roots in Southeast Asia give it a relative advantage. Additionally, Southeast Asia enjoys structural tailwinds such as a young population, increasing digital penetration, and inflows of foreign capital. These factors make the company’s growth story closely aligned with the capital reallocation trend, positioning it as a standout in the “post-American exceptionalism” era.
Rising tariff pressure to drive Southeast Asian e-commerce growth. As U.S.-China trade tensions intensify, global manufacturers, especially Chinese exporters, are increasingly shifting their focus from the U.S. to Southeast Asia as an alternative market. The U.S. has imposed tariffs of up to 145% on most Chinese imports, forcing Chinese producers to divert surplus goods to regional markets. This has further increased the supply and diversity of goods in Southeast Asia, encouraging consumers to turn to platforms like Shopee. Shopee, as the core business of the company, contributed more than two-thirds of the group’s total revenue in 2024, with annual GMV growing 28% year-on-year to $100.5 billion and total orders increasing by 33%. As global trade dynamics gradually shift away from the U.S., Shopee is well-positioned to capture opportunities arising from this supply-demand restructuring. Management anticipates that GMV will grow by another 20% in 2025, driven by improved profitability and a favorable regional trade environment.
4Q24 results. Sea Ltd delivered a 36.7% increase in revenue to US$4.95bn, beating estimates by US$320mn. GAAP Earnings per share was US$0.39, missing estimates by US$0.05. For FY24, all three businesses delivered strong double-digit growth, exceeding the company’s guidance. For FY25, the company expects Shopee’s full-year GMV to grow around 20% in 2025, with continued profitability improvements. SeaMoney’s loan book is projected to grow meaningfully faster than Shopee’s GMV in 2025, with further SPayLater penetration both on and off Shopee in markets like Indonesia and the Philippines. Garena expects double-digit growth in bookings and user base for 2025, supported by the sustained popularity of Free Fire and new content collaborations.
SAP SE is a multinational software company. The Company develops business software, including e-business and enterprise management software, consults on organizational usage of its applications software, and provides training services. SAP markets its products and services worldwide.
Capital inflow to Germany. The continued depreciation of the U.S. dollar, driven by U.S. policy instability and heightened trade tensions, has prompted investors to reduce their exposure to the U.S. market. This loss of confidence in the dollar has increased investment in emerging markets. Germany has recorded an increase in positive net inflows since February, especially in its equities market, signalling increased investor confidence. As Europe’s economy strengthens, businesses will accelerate digital transformation. SAP, as the region’s leading enterprise software provider, is well-positioned to capitalize on increased corporate investment in technology and cloud-based solutions.
Fund flow – Germany
(Source: Bloomberg)
Resilient against tariffs. SAP reported a strong Q1 performance with a 58% YoY increase in operating profit to €2.5bn, surpassing expectations. Revenue rose 11% to €9bn, and EPS jumped 79% to €1.44. Cloud backlog grew 29%, and SAP reaffirmed its full-year cloud revenue forecast of €21.6-€21.9bn. SAP remains crucial in helping businesses navigate global tariff uncertainties and its 86% recurring revenue presents SAP as predictable and resilient amidst the current volatile environment.
1Q25 results. SAP SE delivered a 12.1% increase in revenue to €9.01bn. Earnings per share was €1.44. Cloud revenue grew 27% to €4.99bn and Cloud ERP Suite revenue rose 34% to €4.25bn.
