Maybank cuts STI target to 5,500, keeps re-rating thesis intact

It cited dowgrades in market earnings per share due to high energy costs.

Maybank has lowered its 2026E Straits Times Index (STI) target to 5,500, down from an earlier estimate of around 5,600, citing market earnings per share downgrades driven by higher energy costs.

Despite the cut, Maybank said the re-rating thesis remains intact, pointing to three catalysts—rising liquidity, the Equity Market Development Programme, where $3.95b in fund allocations have been made, and enterprise artificial intelligence adoption.

Moreover, political, fiscal, and policy stability is framed as a market advantage, as 80% of sectors kept earnings guidance unchanged in the first quarter despite the war in the Middle East.

STI’s earnings before interest and taxes margins rose 58 basis points from 2020 to 2025, return on assets improved to 1.57% over the same period, special dividends doubled year on year in 2025, and buyback mandates rose 56%.

Small and mid-cap stocks (SMIDs) saw their price-to-book premium to large caps compress to 58% currently from 85% in 2023 — a gap Maybank expects to narrow further amidst targeted value-up measures.

However, 60% of initial public offerings over the past year are trading below their opening price, which Maybank warns could create contamination risk for future listings and secondary market volatility.

Maybank's most preferred sectors are Tech Manufacturing, Industrials, Banks, Nonbanking financial institutions, Internet, and Plantations.

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