To The Moon

$ocbc bank(O39.SI)$ $UOB(U11.SI)$ $CapitaLandInvest(9CI.SI)$ $Singtel(Z74.SI)$ $Keppel(BN4.SI)$

While SGX and DBS have already reached record highs in 2025, the following five “golden stocks” could offer value and income at current levels. Below, we examine their financial strength, valuation, and dividend sustainability in detail to help investors make informed decisions.

1. Oversea-Chinese Banking Corporation (OCBC, SGX: O39)

Financial Snapshot

• Market Cap: ~S$62 billion

• 2024 Net Profit: S$6.4 billion (+11% YoY)

• Return on Equity (ROE): ~11%

• Capital Adequacy Ratio (CET1): ~15.8% (well above Basel III minimums)

• Loan/Deposit Ratio: ~85% (healthy liquidity position)

OCBC continues to demonstrate resilience through diversified earnings streams, including its wealth management (through Bank of Singapore) and insurance (Great Eastern). Credit costs remain manageable at ~19 basis points in FY2024, signaling prudent risk management.

Valuation Multiples

• Price-to-Earnings (P/E): ~8.7x forward earnings

• Price-to-Book (P/B): ~1.1x

• Dividend Yield: ~5.1%

At under 9x earnings and just slightly above book value, OCBC trades at a discount to DBS despite similar capital strength and a more conservative risk profile.

Dividend Sustainability

OCBC pays ~50% of earnings as dividends, with a payout ratio of ~48% in FY2024, comfortably covered by net income and supported by strong capital buffers. Barring a severe downturn, the dividend appears sustainable, with room for moderate increases in line with earnings growth.

Assumptions:

• Earnings growth: ~5% per year (slower but steady loan and fee growth)

• Dividend payout: stable at ~50%

• Terminal P/E: ~10x (slightly higher than current 8.7x but below peak multiples)

Projections:

• EPS in 3 years: ~S$1.75 → ~S$1.89 in 5 years

• Price appreciation (to ~10x): ~14%–18%

• Dividend yield: ~5% per year

• Cumulative dividends over 5 years: ~25%

Estimated total return (5 years): ~50–55% (~8–9% annualized).

2. United Overseas Bank (UOB, SGX: U11)

Financial Snapshot

• Market Cap: ~S$51 billion

• 2024 Net Profit: S$5.5 billion (+12% YoY)

• ROE: ~12%

• CET1 Ratio: ~14.7%

• Loan Growth: ~7% YoY, driven by ASEAN expansion

UOB remains focused on Southeast Asia’s fast-growing economies. Its acquisition of Citigroup’s consumer banking franchises in Malaysia, Thailand, and Vietnam adds scale and positions UOB to capture rising affluence in ASEAN markets.

Valuation Multiples

• P/E: ~9.2x forward earnings

• P/B: ~1.1x

• Dividend Yield: ~4.9%

While UOB trades at a slight premium to OCBC on earnings, its growth outlook in ASEAN arguably warrants the higher multiple.

Dividend Sustainability

UOB has a payout ratio of ~48%, consistent with peers. With robust profit growth and prudent capital management, UOB’s dividend is sustainable and may rise modestly over time as ASEAN operations mature.

Assumptions:

• Earnings growth: ~6% annually, benefiting from ASEAN expansion

• Dividend payout: stable at ~50%

• Terminal P/E: ~11x (in line with historical average)

Projections:

• EPS in 3 years: ~S$4.60 → ~S$5.20 in 5 years

• Price appreciation (to ~11x): ~20%

• Dividend yield: ~4.9% per year

• Cumulative dividends over 5 years: ~24%

Estimated total return (5 years): ~50–55% (~8–9% annualized).

3. CapitaLand Investment (CLI, SGX: 9CI)

Financial Snapshot

• Market Cap: ~S$13 billion

• 2024 EBITDA: S$2.1 billion

• Funds Under Management (FUM): ~S$133 billion (+8% YoY)

• Net Debt/Equity: ~0.63x (moderate leverage)

• ROE: ~7.5%

CLI is a leading real estate investment manager in Asia, earning steady fee income from its REITs and private funds. Its portfolio mix is increasingly weighted toward resilient asset classes like logistics and data centers.

Valuation Multiples

• P/E: ~13.5x forward earnings

• Price-to-NAV: ~0.85x (trading at ~15% discount to net asset value)

• Dividend Yield: ~3.9%

At a discount to NAV and with healthy recurring cash flow, CLI offers value for long-term investors.

Dividend Sustainability

CLI pays about 45% of earnings as dividends, leaving room to reinvest in its pipeline. Cash flows from fee income and REIT distributions support dividends, which are expected to grow modestly alongside FUM growth.

Assumptions:

• Fee income/FUM growth: ~7% annually

• Dividend payout: remains at ~45%

• Terminal P/E: re-rates to ~15x (reflecting improving ROE and earnings visibility)

Projections:

• EPS in 3 years: ~S$0.30 → ~S$0.35 in 5 years

• Price appreciation (to ~15x): ~25–30%

• Dividend yield: ~3.9% per year

• Cumulative dividends over 5 years: ~20%

Estimated total return (5 years): ~50–55% (~8–9% annualized).

4. Singapore Telecommunications (Singtel, SGX: Z74)

Financial Snapshot

• Market Cap: ~S$38 billion

• 2024 EBITDA: S$4.9 billion

• Net Profit: S$2.3 billion (+7% YoY)

• Net Debt/Equity: ~0.73x

• ROE: ~9%

Singtel is recovering after years of restructuring, with improved profitability from its core operations and growing contributions from its regional associates, notably Bharti Airtel.

Valuation Multiples

• P/E: ~12.3x forward earnings

• EV/EBITDA: ~6.8x

• Dividend Yield: ~4.7%

Singtel remains reasonably valued relative to regional peers and trades at a slight discount to its historical averages.

Dividend Sustainability

Management has guided for a payout ratio of 60–80%, consistent with historical practice. Free cash flow generation remains solid, and dividends appear sustainable, though upside is likely capped unless core earnings grow faster.

Assumptions:

• Earnings growth: ~4–5% annually as turnaround solidifies

• Dividend payout: ~65% maintained

• Terminal P/E: ~13x (in line with historical norm)

Projections:

• EPS in 3 years: ~S$0.20 → ~S$0.23 in 5 years

• Price appreciation (to ~13x): ~15–20%

• Dividend yield: ~4.7% per year

• Cumulative dividends over 5 years: ~23%

Estimated total return (5 years): ~40–45% (~7% annualized).

5. Keppel Corporation (SGX: BN4)

Financial Snapshot

• Market Cap: ~S$9 billion

• 2024 Net Profit: S$885 million

• ROE: ~8.4%

• Net Debt/Equity: ~0.54x (reduced following O&M spin-off)

Keppel is transforming from a traditional conglomerate to a focused provider of sustainable urbanization solutions. Its pivot to renewables, data centers, and sustainable real estate is gradually unlocking value.

Valuation Multiples

• P/E: ~11.7x forward earnings

• Price-to-NAV: ~0.75x (trading at ~25% discount to net asset value)

• Dividend Yield: ~4.2%

Keppel offers value at a significant discount to NAV, with improving fundamentals making it an attractive turnaround play.

Dividend Sustainability

Keppel’s dividends are well covered by operating cash flow. Payout ratios have remained conservative (~40–50%), leaving room for reinvestment while maintaining shareholder returns.

Assumptions:

• Earnings growth: ~6–7% annually as transformation progresses

• Dividend payout: ~45% maintained

• Terminal P/E: re-rates to ~13x (reflecting improved ROIC and earnings quality)

Projections:

• EPS in 3 years: ~S$0.55 → ~S$0.63 in 5 years

• Price appreciation (to ~13x): ~30–35%

• Dividend yield: ~4.2% per year

• Cumulative dividends over 5 years: ~21%

Estimated total return (5 years): ~55–60% (~9–10% annualized).

Comparative Table: Key Metrics at a Glance

Summary Table: 5-Year Estimated Total Returns

Takeaways: Where the Opportunities May Lie

All five “golden stocks” examined here offer respectable expected returns over a five-year horizon. Dividend income remains a significant component of total return for Singapore equities, reflecting the market’s income-oriented nature.

• Keppel and CLI may offer the most upside potential in terms of re-rating and capital appreciation, though they come with higher execution risks.

• OCBC and UOB remain stalwart options for conservative investors, combining income stability with modest upside.

• Singtel offers steady dividends but may require more patience as its turnaround progresses.

For investors willing to hold through market cycles, all five represent credible additions to a diversified, income-focused Singapore equity portfolio. Selective exposure, tailored to risk appetite and return goals, will be key to capturing the next phase of Singapore’s market rally.

Conclusion: Balancing Value, Yield, and Growth

For investors seeking opportunities in Singapore’s equity market beyond SGX and DBS, these five names offer compelling combinations of value, dividends, and potential upside:

• For conservative income investors, OCBC and UOB stand out with attractive yields, strong capital ratios, and undervaluation relative to their fundamentals.

• For real asset exposure, CLI offers discounted access to Asia’s real estate growth with predictable fee income.

• For a recovery story, Singtel presents a reasonable risk/reward profile as its restructuring efforts bear fruit.

• For a turnaround play, Keppel’s transformation and discount to NAV create a potential catalyst for re-rating.

While each carries its own risks, their balance sheets, cash flow profiles, and payout ratios suggest that dividends are sustainable and fundamentals remain sound. Investors looking for relative value in Singapore’s market would do well to consider these “golden stocks” as the next potential leaders in the rally.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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