- Despite our muted earnings outlook next year, we believe that the Straits Times Index (STI) can nevertheless witness P/E multiple expansion given the prevalence of blue-chip defensive stocks with strong cash flow generation and relatively high dividend yields.
- Despite its 3Q rally, the STI remains inexpensive in our view, trading at a forecast 2025 P/E and P/B of 11.5x and 1.2x respectively and paying a yield of 5.3%.
2025 EPS Growth Forecast
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- Our modest below-consensus 1.2% EPS growth forecast for our covered STI stocks for 2025 belies the fact that there are a number of stocks within our universe that should deliver strong returns in the near to medium term, backed by strong cash flow and sustainable dividend yields.
- The key sectors that will contribute to the positive earnings growth in UOB Kay Hian’s coverage universe for 2025 are the plantation, property, REITs, industrials, technology, telecommunications and “others” sectors.
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- Industrials, technology and telecommunications should continue to experience strong earnings growth on a y-o-y basis.
- The gaming segment will drive 2025 earnings growth within the “others” sector.
“Safer than houses”.
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