ST Engineering Ltd is a global technology, defence, and engineering group. The Company uses technology and innovation to solve problems and improve lives through its diverse portfolio of businesses across the aerospace, smart city, defence, and public security segments. ST Engineering serves clients worldwide.
S$4.3 Billion in New Contracts. Earlier this month, ST Engineering announced that it secured S$4.3 billion in new contracts during 4Q24. This includes S$1.8 billion from its commercial aerospace segment, S$1.7 billion from the defense and public security segment, and S$700 million from urban solutions and satcom. The commercial aerospace division secured multiple contracts across its maintenance, repair, and overhaul (MRO) and aerostructures and systems sub-units, including a 15-year exclusive agreement with Akasa Air, a low-cost airline based in India. The continued strength of its order book underscores ST Engineering’s solid market position and sustained demand for aerospace solutions, driven by robust aviation industry growth.
LEAP-1B MRO Contract with Korean Air. ST Engineering’s commercial aerospace business has signed a five-year MRO contract to support the CFM LEAP-1B engines powering Korean Air’s Boeing 737 MAX fleet. This marks the company’s first contract with South Korea’s flag carrier. Under the agreement, ST Engineering will provide quick-turn services, including high-pressure turbine (HPT) repairs and Performance Restoration Shop Visit (PRSV) services, from its MRO facility in Singapore. The contract reinforces Korean Air’s confidence in ST Engineering as a trusted partner for high-quality engine services, supporting the airline’s long-term growth plans.
Strategic Partnership with Kazakhstan Paramount Engineering (KPE). ST Engineering’s international defense business has secured a strategic partnership with Kazakhstan Paramount Engineering (KPE) to establish production capabilities for a new military vehicle. The amphibious, multi-purpose armored vehicle will be manufactured at KPE’s facility in Kazakhstan, based on ST Engineering’s battle-proven Terrex Infantry Fighting Vehicle, designed to operate effectively in open water conditions. ST Engineering will provide engineering and technical support for production, which is set to begin in 2025. This marks the company’s entry into the Central Asian market—its first defense vehicle contract with a licensed partner in the region—reinforcing its strategy to drive growth through localization, in-country support, and industry partnerships.
3Q24 results review. Revenue rose by 14.3% YoY to S$2,782mn in 3Q24, compared to S$2,433mn in 3Q23, driven by double-digit YoY growth in its commercial aerospace and defence and public security segments. In the 3rd quarter, its commercial aerospace revenue and defence and public security revenue grew 30.8% YoY to S$1.27bn and 7.3% YoY to S$1.05bn respectively.
Market Consensus.
(Source: Bloomberg)
DBS Group Holdings Ltd (DBS SP): Budget’25 to boost economy
DBS Group Holdings Limited and its subsidiaries provide a variety of financial services. The Company offers services including mortgage financing, lease and hire purchase financing, nominee and trustee, funds management, corporate advisory and brokerage. DBS Group also acts as the primary dealer in Singapore government securities.
Potential benefits from budget. On 18 February, Prime Minister Lawrence Wong announced a bonanza of vouchers, credits, tax rebates and enhanced wage support for Singaporeans and corporations. Singapore’s budget 2025 introduced measures that could bolster local banks by stimulating economic activity and improving credit conditions. Infrastructure investments, including top-ups to key funds, are likely to drive higher loan demand. The 50% corporate tax rebate for SMEs may ease financial pressures, reducing asset quality risks for banks. Consumer-focused initiatives could support spending while mitigating inflationary risks, lowering non-performing loans. Additionally, incentives for SGX listings and fund management may enhance capital market activity, benefiting banks through increased trading volumes and demand for financial products. Overall, the budget measures are expected to create a favourable environment for Singapore banks, driving loan growth, improving asset quality, and supporting broader financial sector activity.
Leadership changes ahead of CEO transition. DBS Bank has appointed Derrick Goh as its first Group Chief Operating Officer (COO), effective 1 April, overseeing operations and transformation. He will also join the bank’s executive committee. Koh Kar Siong will take over as head of audit and join the management committee. Additionally, Jimmy Ng, current head of operations, will retire on 1 July but continue as a senior adviser for AI until year-end. These changes come as Piyush Gupta prepares to step down as CEO on 28 March, with Tan Su Shan, deputy CEO since August 2024, set to succeed him. The leadership changes at DBS Bank signal a strategic transition aimed at sustaining growth and strengthening its operational and digital transformation efforts. DBS’ leadership changes reinforce its commitment to operational efficiency, and governance, ensuring continued growth amid evolving global banking trends. The bank is well-positioned for sustained profitability and market leadership under its new executive team.
Special bonus and capital return amid record profits. DBS will distribute a one-time S$1,000 bonus to all staff except senior managers, totaling S$32 million, as a reward for their contribution to its record performance. This bonus will benefit 90-95% of employees. The bank also announced a capital return dividend of S$0.15 per share per quarter for FY25, with plans for similar distributions over the next two years. This is part of its strategy to reduce excess capital through dividends, special payouts, and share buybacks. For 4Q24, DBS reported a net profit of S$2.52 billion, 11% YoY increase, bringing its full-year net profit to a record S$11.29 billion, up 12% YoY. Despite macroeconomic uncertainty, interest rate trends and geopolitical risks, DBS managed to outperform expectations. We believe that the bank remains well-positioned for long-term growth, backed by record earnings, strong leadership succession, and continued investment in technology.
4Q24 results review. Total income for 4Q24 rose 11% to S$5.51bn and net profit rose 11% YoY to S$2.52bn, compared with S$2.27bn from the year-ago period. DBS’ full-year net profit was brought to a new record high of S$11.29bn, up 12% from the year-ago period. DBS declared Q4 dividend at S$0. 0.15 per share per quarter to be paid out over financial year 2025; it expects to pay out a similar amount of capital in the next two years.
Market Consensus.
(Source: Bloomberg)
Sichuan Baicha Baidao Industrial Co Ltd (2555 HK): Optimisn surrounding the China’s tea market
Sichuan Baicha Baidao Industrial Co Ltd is a China-based company mainly engaged in the development and sales of diversified tea beverage products. The Company’s main business is to provide combinations of natural ingredients with Chinese tea drinks through franchisees and focus on the production and sales of tea drinks to customers. The Company operates its own product brand Chabaidao. The Company’s products include classic tea drinks typically available throughout the year, and seasonal tea drinks and regional tea drinks only sold in limited time periods or certain regions, including milk tea, fresh fruit tea, juice, and others. The Company mainly conducts its business in the domestic market.
Positive market sentiments towards the chinese tea and beverage market. China’s largest fresh-drink company, Mixue Group, is set to raise HK$3.45 billion (US$444 million) through a Hong Kong IPO to fuel its expansion amid intensifying competition. With a network of over 45,000 stores across mainland China and 11 international markets—including Southeast Asia, Australia, Japan, and South Korea—Mixue plans to allocate the proceeds toward production facility upgrades, brand enhancement, marketing, working capital, and general corporate purposes. The listing underscores investor confidence in the resilience and profitability of the tea and beverage sector. A strong market reception for Mixue’s IPO could generate positive spillover effects for other industry players, such as Baicha Baidao, which operates in a similar market segment. This renewed optimism may drive a broader revaluation of tea-related stocks, potentially boosting Baicha Baidao’s share price as investor interest in the sector grows.
More efforts to boost consumption in China. China is ramping up efforts to boost domestic consumption, with Premier Li Qiang recently emphasizing targeted measures to stimulate consumer spending and improve livelihoods. This policy shift is expected to benefit F&B companies like Sichuan Baicha Baidao, which could see higher sales as consumer demand strengthens. Additionally, investors and economists are closely watching China’s annual parliamentary meeting in early March for potential stimulus measures, particularly as the country faces growing uncertainties in its export sector amid U.S. President Donald Trump’s return to the White House.
Growth of the Chinese tea market supports long-term expansion. The rapid expansion of China’s tea and beverage sector presents a strong tailwind for Sichuan Baicha Baidao. The Chinese-style tea market reached RMB193.3bn in 2023, reflecting a 15.7% YoY increase, with projections to surpass RMB250bn by 2025. This sustained growth is driven by shifting consumer preferences toward premium and innovative tea-based drinks. As a key player in the industry, Baicha Baidao is well-positioned to capitalize on rising demand, benefiting from increasing store openings, product innovation, and expanding consumer adoption.
1H24 earnings. Revenue fell by 10.0% YoY to RMB2,395.8mn in 1H24, compared to RMB2,660.7mn in 1H23. Profit decreased by 59.9% from RMB595.4mn in the first half of last year to RMB238.6mn. Basic earnings per share was RMB0.178 in 1H24, compared to a basic earnings per share of RMB0.549 in 1H23.
China Mobile Ltd is a company mainly engaged in the provision of communication and information services. The Company’s businesses include customer market business, home market business, business market business and new market business. The customer market business mainly provides fifth-generation mobile communication technology (5G) mobile services and brand differentiated service operations. The home market business mainly provides home wired broadband services, mobile housekeeping smart services and smart home value-added services. The business market business is engaged in the research and development and sales of cloud computers and Internet of Things card services. The new market business includes international business, equity investment, digital content and financial technology.
AI integration. Earlier this month, China Mobile, along with other major Chinese telecom companies, announced the integration of DeepSeek’s artificial intelligence (AI) models into their services and products. The move follows a broader trend among the country’s top tech firms, including Alibaba Group, Tencent Holdings and Baidu Inc, which have ramped up support for DeepSeek’s latest AI models on their respective platforms. While these telecom giants have been developing their own large language models (LLMs) over the past two years amid a global AI boom spurred by OpenAI, they primarily leverage DeepSeek’s models for cloud-based applications. China Mobile, in particular, has incorporated DeepSeek’s full suite of models—from DeepSeek-V1 to the latest DeepSeek-R1—into its computing platform. This enables businesses of all sizes to access the models, deploy application programming interfaces (APIs), and build new AI agents on its platform.
Growth in smart devices and 5G adoption. China’s mobile phone market experienced robust growth in 2024, with total shipments increasing by 8.7% to 314 million units. Notably, December 2024 saw a significant YoY surge of 22.1%, reaching 34.53 million units. 5G smartphones dominated the market, accounting for 88.1% of December shipments and 86.6% of total annual shipments. This trend is supported by China’s rapidly expanding 5G infrastructure, which now includes over 4.25 million 5G base stations and serves more than 1 billion 5G users. The rise in smart device adoption, particularly 5G-enabled phones, is expected to drive an expansion of China Mobile’s customer base, as more users seek high-speed connectivity and advanced mobile services.
Strategic cooperation agreement to deepen AI development. China Mobile recently announced a strategic cooperation agreement with Chengdu City to deepen collaboration across multiple sectors. Under this agreement, the two parties will enhance infrastructure development in AI, 5G-A, and next-generation networks, drive technological innovation and commercialization, and strengthen partnerships in areas such as supply chains, industrial investment, and intelligent hardware. They will also explore opportunities in smart cities, the data industry, 5G-powered industrial internet applications, and the low-altitude economy, fostering high-quality growth in Chengdu’s electronic information and audio-entertainment industries. This initiative is expected to further position China Mobile to capitalize on China’s expanding AI landscape.
9M24 earnings. Revenue rose by 2.0% YoY to RMB791.5bn in 9M24, compared to RMB775.6bn in 9M23. Profit attributable to equity shareholders was RMB110.9bn, up by 5.1% YoY from RMB105.5bn. Basic earnings per share was RMB5.18 in 9M24, compared to a basic earnings per share of RMB4.94 in 9M23.
Market consensus.
(Source: Bloomberg)
Costco Wholesale Corp (COST US): Counter inflationary play
Costco Wholesale Corporation is a membership-only warehouse club. The company sells a wide variety of merchandise, including groceries, automotive supplies, toys, hardware, sporting goods, jewelry, electronics, apparel, health and beauty products, and other miscellaneous items. Costco Wholesale serves consumers worldwide.
Rising inflation does not hinder good sales growth. U.S. inflation remained high in January, while U.S. retail sales fell by 0.9% month-over-month and rose by 4.2% year-over-year. The company’s U.S. comparable net sales in January rose by 9.2% year-over-year to $19.51 billion. 36% of the company’s members have an annual income exceeding $125,000, a group that is relatively less affected by inflation and has more stable spending habits. Because the company’s primary target customer base is relatively high-income, membership retention rates are high.
Defensive and growth attributes. The company’s business model differs from that of general large supermarkets, which maintain operations through low-profit, high-volume sales. Costco maintains ultra-low wholesale prices, and its main source of profit is membership fees. The growth of membership numbers and increases in membership fees are long-term growth drivers. As of December 2024, the number of paid household memberships reached 77.4 million, an increase of approximately 8% year-over-year, and the total number of cardholders reached 138.8 million. The global membership renewal rate is 90.4%. In addition, since September 1, 2024, membership fees in the United States and Canada have been increased, with the annual fee for regular memberships increasing from $60 to $65, and the annual fee for executive memberships increasing from $120 to $130. Membership fees in South Korea will increase by 7.5% to 15.2% in May 2025. The company currently operates 897 warehouses in 13 countries and plans to open 29 new warehouses in 2025, 12 of which will be outside the United States.
1Q25 results. Revenue grew 7.5% YoY to US$62.15bn, beating estimates by US$150mn. Non-GAAP EPS was US$3.82, exceeding expectations by US$0.03.
Market consensus
(Source: Bloomberg)
Palo Alto Networks Inc (PANW US): Solidifying its position in network security
Palo Alto Networks, Inc. provides network security solutions. The Company offers firewalls that identify and control applications, scan content to stop threats, prevent data leakage, integrated application, user, and content visibility. Palo Alto Networks serves customers worldwide.
Global cloud spending expected to grow rapidly in 2025. According to Gartner’s latest forecast, global end-user spending on public cloud services is expected to grow from US$595.7bn in 2024 to US$723.4bn in 2025. Spending on cybersecurity is projected to increase from US$183.9bn in 2024 to US$212.0bn in 2025. With the widespread adoption of artificial intelligence, more investments are flowing into the security software market, including application security, data security and privacy protection, and infrastructure protection. The cybersecurity market is expected to grow at a compound annual growth rate (CAGR) of 11% until 2030.
Leading player in the firewall market. The company holds a 20% market share in the firewall industry, serving over 80,000 customers worldwide, including large enterprises, government agencies, and financial institutions. The company maintains a customer retention rate of over 90%, demonstrating the high demand and stability of its products. Its cloud security platform, including Prisma Cloud and Cortex XSOAR, is expanding rapidly in the market. In 4Q24, Prisma Cloud achieved a 38% YoY growth rate.
Rule of 40. The Rule of 40 is a key metric for measuring the profitability and growth of Software-as-a-Service (SaaS) companies. In the most recent quarter, the sum of the company’s revenue growth rate and EBITDA profit margin reached 48.6, reflecting strong performance.
2Q25 results. Revenue grew 14.1% YoY to US$2.26bn, beating estimates by US$20mn. Non-GAAP EPS was US$0.81, exceeding expectations by US$0.03. The company raised its FY25 revenue forecast to US$9.14bn – US$9.19bn, up from the previous guidance of US$9.12bn – US$9.17bn.
