To The Moon

As a new year approaches, a fresh earnings season looms, with numerous companies scheduled to announce their full-year 2025 results in early 2026.

Investors are poised to scrutinize which contenders warrant their investment in the coming year. Dedicating time now to understand these companies could allow for seizing opportunities before significant price movements occur.

A selection of blue-chip stocks has been curated, offering a blend of stability and potential upside for the upcoming earnings season.

These companies are anticipated to gain from a mix of declining interest rates, escalating data centre demand, or other appealing characteristics such as attractive valuations.

Keppel DC REIT

Keppel DC REIT holds a portfolio of data centres spanning Asia, Australia, and Europe.

Nonetheless, the majority of its revenue originates from Singapore, which contributed 72% of its income in the first half of 2025.

The REIT's recent financial performance has shown accelerating growth. In 2024, gross revenue increased by 10.3%, net property income rose 6.3%, and distribution per unit grew by 0.7%.

In contrast, these metrics accelerated significantly to 34.4%, 37.8%, and 12.8% respectively during H1 2025, primarily driven by new data centre additions to its portfolio.

As Keppel DC REIT prepares to report its H2 2025 earnings in January 2026, it is positioned to benefit from several favourable factors.

Firstly, interest rates have been on a downward trajectory. The US Federal Reserve implemented a further 0.25% cut in December 2025, setting the benchmark rate between 3.5% and 3.75%.

With President Trump set to appoint a new Fed Chair in 2026 and his clear preference for substantially lower rates, the likelihood of additional rate cuts in 2026 has increased.

REITs typically carry significant debt to finance property acquisitions.

Consequently, lower interest rates should reduce their financing costs, thereby increasing distributable income to investors and potentially driving unit prices higher.

Secondly, Keppel DC REIT is well-positioned to capitalize on the expanding adoption of artificial intelligence, which is expected to fuel demand for its data centre services.

Thirdly, while all REITs operate with debt, leverage levels vary, and Keppel DC REIT maintains the lowest gearing among its Singapore-listed pure-play data centre REIT peers.

Its aggregate leverage stood at 29.8% as of Q3 2025, compared to 32.5% for NTT DC REIT (SGX: NTDU) and 38.5% for Digital Core REIT (SGX: DCRU).

This lower leverage provides Keppel DC REIT with greater capacity for future growth through acquisitions and enhances its resilience against potential macroeconomic headwinds.

Singapore Telecommunications

Another company demonstrating positive financial momentum is Singapore Telecommunications, or SingTel, the nation's leading telecom provider.

It also holds controlling or significant stakes in other regional telecom operators across Australia, India, Indonesia, the Philippines, and Thailand.

For the fiscal year ending March 2025 (FY2025), group revenue saw a modest 0.8% increase on a constant currency basis, while underlying net profit, excluding exceptional items, climbed 11.4%.

SingTel's growth accelerated in its most recent H1 FY2026 results, with revenue and underlying net profit rising 1.9% and 16.7% year-on-year, respectively.

Similar to Keppel DC REIT, SingTel is benefiting from rising data centre demand.

In November, reports indicated the telco, alongside private equity firm KKR, is negotiating a S$5 billion bank loan to facilitate the acquisition of ST Telemedia Global Data Centres, a major Asian data centre operator.

These assets would synergize with SingTel's existing Digital InfraCo division.

Further catalysts for SingTel's share price include improving metrics in its core telecom markets in Singapore, India, and Australia.

Analysts project average revenue per user to stabilize in Singapore, achieve double-digit growth in India, and strengthen in Australia, where its Optus subsidiary is the second-largest player.

Optus's currently low return on invested capital is also forecast to recover.

Analysts anticipate these factors will lead to a re-rating of SingTel's forward EV/EBITDA multiple from 5x towards the regional average of 7x.

Sembcorp Industries

The Australian link continues with Sembcorp, another SGX-listed company worthy of attention. The firm recently announced the acquisition of Alinta Energy, a leading Australian integrated energy company, for S$4.8 billion.

This acquisition is expected to be immediately accretive to earnings, projected to have boosted adjusted EBITDA by 36%, net profit by 14%, and return on equity by 280 basis points for the twelve months to June 2025.

However, the deal will also increase Sembcorp's net debt by 74%, from S$7.8 billion to S$13.6 billion on a pro-forma basis.

After peaking at S$7.85 in July, Sembcorp's share price had declined 24% to S$5.95 by 22 December. This pullback has left the stock trading at a relatively cheap valuation compared to peers, with a trailing twelve-month PE ratio of 10.6.

This is less than half the median PE ratio of 24x for comparable listed peers in the region.

Sembcorp's relatively lower valuation offers investors a margin of safety and greater potential for PE ratio expansion in the future.

Positive analyst coverage of the Alinta deal could serve as a catalyst; for instance, Macquarie Equities Research upgraded Sembcorp to 'outperform' with a target price of S$7.04 post-announcement.

Notably, management assured analysts that the company expects to maintain its dividend, a crucial factor for shareholders seeking consistent income.