Retail price index (RPI)

Table of Contents

Retail price index (RPI)
What is RPI?
Understanding RPI
History of RPI
Formula of RPI
Calculation of RPI
Frequently Asked Questions

Retail price index (RPI)

The Retail Price Index (RPI) is one of the two main measures of consumer inflation produced by the United Kingdom’s Office for National Statistics (ONS). Thus, most of the information is based on the UK.

The term “inflation” refers to a sustained rise in the price of goods and services throughout an economy. Thus, a rise in inflation would suggest a decline in the currency’s purchasing power. Inflation is calculated using a variety of metrics, such as the Retail Price Index (RPI). The retail price index tracks the change in average prices over a specific period. A hypothetical shopping cart called the “Basket of Products” represents the important goods and services individuals are expected to purchase.

What is RPI?

The retail price index (RPI) is an unofficial measure of inflation that analyses the variation in monthly prices for retail items and services to calculate inflation. It is known as the consumer price index (CPI) in the USA. It is published monthly by the Bureau of Labour Statistics (BLS). The RPI is based on the prices of a representative sample of retail goods and services.

The RPI is determined as an arithmetic mean to determine how much different daily-use products and services cost. It mostly increases salaries, rent, pensions, index-linked gilts, and other costs.

Understanding RPI

The RPI, a more traditional measure of inflation, is still reported because it determines the cost of living and wage growth. Still, it is not regarded as the government’s official inflation rate. RPI was initially calculated for June 1947, replacing the earlier Cost of Living Index. It once served as the primary official indicator of inflation.

The RPI is important because it adjusts government benefits and pensions for inflation. It is also used by businesses to make decisions about prices and wages. It is still used to determine how much social housing rent, pensions, wages, interest rates on index-linked gilts, student loan rates, and other yearly costs rise.

Nonetheless, the Consumer Price Index (CPI) now serves as the official replacement as a gauge of inflation recognised nationally. The ONS assessed RPI data following the Statistics and Registration Service Act of 2007 and the Code of Procedure for Official Statistics.

As a result, it was revealed that RPI needed to be more effective in upholding the current state of the National Statistics. CPI was thus formally chosen as the inflation indicator. Due to its use in long-standing contracts tied to inflation, the RPI remains the most widely used indicator despite its status. RPI data is never altered after it has been published.

History of RPI

The Interim Index of retail prices, used since June 1947, was replaced by RPI in 1956. It once served as the primary official indicator of inflation. The CPI has returned it in that sense. The government continues using the RPI as a benchmark for several calculations, including the amounts due on index-linked instruments, such as gilts and rent increases for social housing. It’s also a common place for companies to negotiate.

Since 2003, the government has employed neither the inflation objective for the Bank of England’s Monetary Policy Committee (BEMPC) nor the foundation for indexing former public sector employees’ pensions. Since 2016, the UK’s state pension has been indexed by the higher CPI or 2.5% growth in average wages (“the triple lock”).

Recently, the ONS proposed certain changes to the RPI framework. The common budgetary actions taken in the fiscal year that ends in 2023 may lower the yearly RPI rate by 0.09% because the monthly rate changes for the fiscal year ending in 2023 (0.12) will be balanced out by the monthly rate deviations for the fiscal year ending in 2022 (0.03). Remember that the RPI rate increased 6.4% over the previous 12 months, from 1.4% in January 2021 to 7.8% in January 2022.

Formula of RPI

The USA’s RPI is calculated using a formula that considers the prices of a representative basket of goods and services. The basket of goods and services is updated periodically, and the RPI is calculated using data from the previous month. The basket of goods and services is divided into eight categories: food and beverages, housing, apparel, transportation, medical care, recreation, education, and others.

Prices are collected for a representative sample of items in each category. The weights are then applied to the price changes for the items in the sample to arrive at the RPI.

Calculation of RPI

RPI is calculated by the BLS and is released monthly.

Frequently Asked Questions

What is the difference between RPI and CPI?

RPI is an unofficial inflation measure that determines price variations for retail products and services, including home prices. The CPI excludes housing costs and is an official inflation index defining price adjustments for products and services. Moreover, RPI only considers UK homes, leaving out 4% of the highest-income and pensioner-dependent households.

How is the RPI explained?

The RPI calculates the inflation rate and cost of living by analysing the price change of a sample of retail goods. RPI needed to be more accurate in gauging current inflation rates. Typically, it overestimates or underestimates the rate of change in prices, which is over or understated inflation. RPI needed to be more of a gauge of inflation. It is still used to determine how much social housing rent, pensions, wages, interest rates on index-linked gilts, student loan rates, and other yearly costs rise.

What is the RPI table?

The retail price index table in the USA is 300.84 in 2023.

What is a RPI calculator?

The RPI calculator utilises the unadjusted RPI for All Urban Consumers average series for all goods across all US cities. This information reflects changes in the cost of all consumer products and services urban families consume.

When is the CPI used?

The CPI is typically the best metric to use when modifying consumer payments so that people may buy a market basket of goods and services comparable to one they could buy in a previous period at today’s prices.

Related Terms

Other Terms

Know More about

Margin Trading

Bond Trading

Securities Lending

Supplementary Retirement Scheme

Money Market Funds

REITs ETF

Singapore Stocks

Opening Investment Account

Tools/Educational Resources

Markets Offered by POEMS

Read the Latest Market Journal

Microsoft Corp: Cloud Momentum Builds but Capital Intensity Weighs — Target Price US$515

Published on Nov 12, 2026 0

Brief Overview Microsoft Corp delivered first-quarter results for financial year 2027 in line with expectations, with revenue and profit after tax and minority interests both meeting 24 per cent of Phillip Securities Research's full-year 2027 forecasts. Revenue grew 19 per cent year on year, led by Cloud Azure growth of 48 per cent year on year. The analyst maintains a financial year 2027 revenue growth forecast of 17 per cent, with Azure expected to accelerate further to 49 to 50 per cent constant-currency growth in the second quarter. Capital expenditure is expected to accelerate in the second half of financial year 2027, driven by CPUs, higher memory and storage costs, and delayed third-party GPU capacity. Investment Positives Strongest Cloud Azure Growth in Five Years Microsoft Cloud Azure grew 48 per cent year on year in the first quarter of financial year 2027, its strongest growth rate in five years, with further acceleration to 49 to 50 per cent expected in the second quarter. The company added 24 new data centres during the quarter, bringing the total to 488 as of the fourth quarter of financial year 2026. Importantly, higher growth was not solely driven by new capacity but also came from existing infrastructure. Three key drivers underpinned this performance. First, GPU efficiency gains allowed existing GPUs to process more artificial intelligence workloads through better software and lower GPU idle time, without proportionally increasing hardware spending. Second, Microsoft allocated additional capacity to highest-value demand — specifically Foundry, the platform that developers use to build, deploy and manage AI applications and models — making more AI model capacity available to customers and driving higher token consumption. Third, higher-than-expected token pricing acted as an average revenue per user lever, as customers consumed higher-quality models for more complex reasoning tasks. This combination of efficiency improvements, capacity prioritisation and pricing power paints a picture of a cloud business that is generating incremental revenue from both new and existing infrastructure. Returns Improving Despite Enormous Capital Expenditure Microsoft Cloud revenue grew strongly by 30 per cent year on year to US$63.9 billion in the first quarter, comprising Azure and cloud-delivered services including M365 Commercial, Copilot, GitHub Cloud and others. Cloud revenue covered 1.4 times quarterly capital expenditure of US$45.2 billion, broadly flat year-on-year. Margins held up well despite continued AI infrastructure investment. Operating margin reached 50 per cent, up from 49 per cent in the first quarter of financial year 2026. Adjusted net margin, excluding the OpenAI investment impact, remained resilient at 39.4 per cent, up from 38.0 per cent in the second quarter of financial year 2026 and broadly comparable with 39.7 per cent a year ago. This suggests the infrastructure ramp has yet to materially dilute underlying profitability. Adjusted earnings per share grew strongly at 18 per cent year-on-year to US$4.89. Investment Challenges Weakening Windows OEM and Devices Segment The Devices and Consumer revenue segment declined 3 per cent year on year, with Windows OEM and Devices revenue underperforming significantly, falling 22 per cent year on year. This segment covers the licensing of Windows to PC manufacturers that pre-install it on their devices. Three factors contributed to the decline. First, OEMs and channel partners drew down elevated inventory levels following the previous quarter's inventory build-up. Second, weaker PC demand persisted amid rising memory costs and device prices, discouraging purchases. Third, the comparison base was tougher owing to the prior year's boost from the Windows 10 end-of-support cycle. The outlook has worsened, with Windows OEM and Devices expected to decline in the mid-30s percentage range in the second quarter of financial year 2027 as these factors persist. Rising Capital Intensity and Financing Cost Risks While liquidity remains sufficient with US$64.5 billion in cash and equivalents and positive free cash flow, capital intensity is rising. Capital expenditure reached 78 per cent of operating cash flow of US$58 billion in the first quarter. Depreciation and amortisation intensity rose to 12.7 per cent, up from 11.6 per cent in financial year 2026 and 12.1 per cent in financial year 2025. Notably, 75 per cent of the US$45.2 billion capital expenditure was directed to shorter-lived CPUs and GPUs, raising both depreciation charges and future replacement needs. Microsoft also added US$7.4 billion of finance leases and is reportedly seeking at least US$25 billion in bonds. Higher fixed costs from leases and debt make returns on AI infrastructure more dependent on sustained utilisation and monetisation. Outlook The analyst maintains a financial year 2027 group revenue growth forecast of 17 per cent. Azure is expected to grow 49 to 50 per cent in constant-currency terms in the second quarter, supported by OpenAI backlog conversion, strong enterprise AI adoption and global capacity expansion. Demand continues to outpace supply. M365 Commercial Cloud growth should remain supported by stronger monetisation of premium SKUs including Copilot, E5 and E7, alongside increased usage-based offerings. The PC hardware business is expected to remain weak owing to elevated inventory levels and weaker PC demand. Capital expenditure is expected to accelerate in the second half of financial year 2027, driven primarily by CPUs, including higher memory and storage costs, and delayed delivery of leased third-party GPU-as-a-service. Recommendation and Target Price Phillip Securities Research maintains its NEUTRAL recommendation on Microsoft Corp with an unchanged DCF-based target price of US$515. Financial year 2027 forecasts are also unchanged. The analyst notes that returns are improving despite elevated capital expenditure, with Cloud revenue growing 30 per cent year on year and operating margin at 50 per cent. However, capital intensity remains high, with 75 per cent of capital expenditure directed to shorter-lived CPUs and GPUs and depreciation intensity rising. Higher lease and debt funding may also raise fixed costs, tempering returns on AI infrastructure despite strong growth. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

NetLink NBN Trust Maintains Steady Cash Flow Despite Rising Costs, Target Price Raised to S$0.96

Published on Nov 12, 2026 1

Company Overview NetLink NBN Trust delivered a steady but unspectacular set of first-half results for the financial year ending 2027. Revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) came in within expectations, reaching 49 per cent and 50 per cent, respectively, of Phillip Securities Research's full-year forecasts. First-half EBITDA edged up 0.8 per cent to S$144.6 million, while distribution per unit (DPU) rose 1.1 per cent year on year to 2.74 cents. Revenue for the period was S$200.3 million, marginally higher than the S$199.9 million recorded in the prior corresponding half. Net profit, however, slipped 2.3 per cent to S$41.2 million. The improvement in other operating costs was attributable to the absence of a S$1.3 million write-off seen in the prior year and the reversal of an over-accrual of maintenance costs, the amount of which was not disclosed. Residential fibre connections are recovering following operators' exercise of removing inactive connections. Investment Positives Fully hedged interest rate exposure The standout positive in the our assessment is NetLink's proactive management of its debt costs. The trust has fixed or hedged all S$991 million borrowings at an interest rate of approximately 2.4 per cent, with an average debt maturity of 4.4 years. This is a significant improvement from the position as recently as March, when only 48 per cent of borrowings were at a fixed rate. In a rising interest rate environment, this hedging strategy provides considerable certainty over finance costs for the medium term and underpins the stability of cash flows available for distribution to unitholders. NetLink's distribution yield of 5.8 per cent is supported by these stable cash flows and the fully hedged financing structure. For income-focused investors, the predictability of finance costs at 2.4 per cent offers a degree of comfort, particularly given the volatility in interest rate markets. Investment Challenges Slow recovery in residential connections The key concern highlighted by the us is the pace of recovery in residential fibre connections. Following a contraction of approximately 6,000 connections in FY26 — driven by operators removing inactive connections — the net additions have turned positive. However, the annualised pace of recovery at roughly 10,000 connections is materially below Phillip Securities Research's forecast of 20,000 connections. This shortfall suggests that the structural demand recovery may take longer than initially anticipated, potentially constraining revenue growth from the residential segment. Rising cost pressures on EBITDA margins We expect EBITDA margins to remain under pressure from multiple fronts. The completion of the Seletar central office has led to higher staff and maintenance costs. Additionally, NetLink's new IT system incurs more in operating expenditure than in capital expenditure, adding a recurring cost burden. Together, these factors — IT costs, staff costs, and maintenance expenses — are expected to weigh on margins and limit EBITDA growth going forward. Lack of DPU growth diminishes yield appeal Perhaps the most significant challenge for NetLink is the absence of meaningful DPU growth. While the 5.8 per cent distribution yield is reasonable in absolute terms, the lack of growth in distributions makes it less compelling in an environment of rising inflation and interest rates. Income investors who can access alternative yield instruments with better growth prospects may find NetLink's static yield profile less attractive.lack of growth in distributions makes it less compelling in an environment of rising inflation and interest rates. Income investors who can access alternative yield instruments with better growth prospects may find NetLink's static yield profile less attractive. Outlook Our outlook for NetLink is cautious. EBITDA margins are expected to remain under pressure as the cost increases from the Seletar central office, the new IT system, and general staffing expenses continue to flow through. The absence of EBITDA and DPU growth means that distribution yield is likely to remain static, which reduces the trust's attractiveness in an inflationary and rising-interest-rate environment. While the fully hedged borrowing structure provides stability on the finance cost front, this alone may not be sufficient to drive re-rating or deliver the kind of total returns that investors are seeking in the current climate. Recommendation and Target Price Phillip Securities Research maintains a NEUTRAL recommendation on NetLink NBN Trust with an unchanged target price of S$0.96. The current unit price stands at S$0.94, implying modest upside to the target. The recommendation reflects the trust's stable but unexciting fundamentals — supported by fully hedged borrowings and a stable distribution yield of 5.8 per cent, but tempered by cost pressures, slow residential connection recovery, and the absence of meaningful DPU growth. There is no change to the FY27 forecast, recommendation, or target price. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

Sheng Siong Group: Headwinds Loom as Target Price Lowered to S$2.75

Published on Nov 12, 2026 1

Company Overview Sheng Siong Group delivered third-quarter 2026 results broadly in line with expectations. Nine-month revenue and net profit after tax and minority interests (PATMI) came in at 76 per cent and 74 per cent, respectively, of Phillip Securities Research's full-year 2026 forecast. Third-quarter PATMI rose 2 per cent year on year to S$44.6 million, while revenue grew at a slower pace of 6 per cent year on year, with store closures shaving off 2 percentage points of revenue. Staff costs continued to outpace revenue growth owing to progressive wage requirements and competitive pressures. Investment Positives Improving Gross Margins The standout positive in the our assessment is the continued improvement in gross margins. Gross margins extended their upward trajectory with a 0.7 percentage-point year on year improvement to 32.3 per cent in the third quarter. We attribute this gain to scale advantages in the fresh produce segment and more benign competition, which have enabled the group to extract better margins from its operations. Long-Term Market Share Trajectory Looking beyond the near-term headwinds, we note that the longer-term trajectory remains positive. The group has been consistently gaining market share in the grocery market, a trend that supports its competitive positioning over time. This structural advantage should serve the company well as it continues to scale and benefit from operational efficiencies. Active Store Pipeline On the expansion front, three Housing and Development Board (HDB) tenders and one Singapore Land Authority (SLA) tender are still awaiting results, providing potential catalysts for store network growth. Beyond these public tenders, additional new stores are under discussion through several private leases. These opportunities, if realised, could provide an avenue for revenue growth. Indirect Impact from Middle East Conflict Well Managed The impact from the Middle East conflict has been indirect, largely manifesting through diesel costs, supplier prices, and longer lead times. We note that the company has managed this disruption effectively, suggesting resilience in its supply chain operations. Investment Challenges Slower Sales Momentum The principal challenge identified is a deceleration in sales momentum. Same-store sales growth slowed from 2.7 per cent in the first half of 2026 to negative 0.5 per cent in the third quarter. We point to a base effect from SG60 voucher spending in the prior year as a contributing factor. Revenue was further dragged down by two store closures — Elias Mall in March 2026 and Thomson Imperial Court in September 2026 — which reduced revenue by 2.1 percentage points. Rising Electricity Costs A significant headwind is the anticipated doubling of electricity costs from contract renewals in the financial year 2027. We estimate that this increase will shave 1 to 2 percentage points off margins next year, representing a material drag on profitability. Operating Cost Pressures Operating leverage remains a challenge as staff costs and energy costs are climbing faster than revenue. Progressive wage requirements and competitive labour market pressures continue to push personnel expenses higher, while the expected surge in electricity prices compounds the cost burden. These dynamics constrain the group's ability to translate revenue growth into commensurate earnings growth. Sungei Kadut Distribution Centre The S$520 million Sungei Kadut distribution centre is another consideration. Between 70 to 80 per cent of the capital expenditure will be incurred in financial years 2027 and 2028. While depreciation will only commence in the financial year 2030, pre-operating costs and lower finance income will weigh on near-term earnings. The project, once commenced, will also reduce the interest income currently earned on the group's cash holdings Limited Visibility on New Stores Visibility on new HDB stores in 2027 is weaker, and the pipeline of new stores has not been disclosed. This uncertainty makes it difficult to assess the pace of network expansion and its contribution to revenue growth going forward. Outlook Several headwinds are converging for Sheng Siong. Operating costs are set to rise faster owing to higher electricity prices and competitive wage pressures. Revenue growth will be partially offset by the lagged impact of store closures. The Sungei Kadut distribution centre will begin to absorb capital and reduce finance income before it generates operational benefits. Visibility on new store openings is limited. However, the longer-term outlook remains supported by the group's consistent market share gains and improving gross margins. Recommendation and Target Price Phillip Securities Research maintains its NEUTRAL recommendation on Sheng Siong Group. The target price has been lowered to S$2.75, from the previous S$3.31. This reduction reflects a cut in the price-to-earnings valuation multiple from 28 times to 25 times financial year 2027 estimated earnings. We believe the valuation de-rating is warranted by the softer earnings expected in the financial year 2027. Full-year 2026 earnings estimates are maintained, but financial year 2027 earnings estimates have been lowered by 7 per cent. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

Amazon.com Inc: AWS Dominance and AI Momentum Drive Upgrade — Target Price US$330

Published on Nov 12, 2026 2

Brief Overview Amazon.com Inc delivered third-quarter 2026 results broadly in line with expectations. Revenue grew 12 per cent year on year. Growth was softer because Prime Day shifted from its usual third-quarter timing to the second quarter this year, which pulled forward retail sales. Nine-month revenue and adjusted profit after tax and minority interests (PATMI) reached 70 per cent and 71 per cent, respectively, of Phillip Securities Research's full-year 2026 forecasts. Amazon Web Services (AWS) accelerated for the sixth consecutive quarter, growing 39 per cent year on year — the fastest growth in 19 quarters — with backlog surging 189 per cent year on year. Amazon maintained its full-year 2026 capital expenditure guidance at US$220 billion but expects spending to increase meaningfully in financial year 2027. Investment Positives AI Adoption and Custom Silicon Accelerate AWS Growth AWS revenue grew 39 per cent year on year to US$46 billion, its fastest growth in nearly five years, supported by both core cloud and artificial intelligence workloads. The backlog reached US$578 billion, up 189 per cent year on year. Amazon Bedrock continues to gain traction, with Fortune 500 customer spending increasing nearly seven times year on year and token volume surging nearly 17 times. Graviton and Trainium revenue commitments each increased more than 20 times year on year, while custom silicon helped customers save over US$2 billion in the third quarter alone. The analyst views custom silicon as a key competitive differentiator, enabling AWS to reduce reliance on third-party chip suppliers such as Nvidia and capture a greater share of the AI infrastructure value chain. Margins Exceeded Expectations Operating income surged 61 per cent year on year to US$28.1 billion, exceeding guidance of US$22.5 billion to US$26.5 billion. Operating margin reached a record 13.9 per cent, 160 basis points above expectations. AWS operating income grew approximately 56 per cent year on year to US$17.8 billion, with a 38.7 per cent margin. AI margins are improving rapidly, supported by cost efficiencies from proprietary silicon, higher infrastructure utilisation, and growing inference demand. Retail profitability also improved, supported by fulfilment efficiencies and lower cost-to-serve, despite higher fuel and transportation costs. Strong Demand Visibility Justifies Aggressive Capital Expenditure AWS backlog surged 189 per cent year on year to US$578 billion, with an average contract life of six years, providing strong long-term revenue visibility. Management expects AWS revenue growth to exceed 40 per cent in both the financial years 2027 and 2028, supported by customer commitments extending well into the financial year 2029. Full-year 2026 capital expenditure guidance remains at US$220 billion, but spending is expected to increase meaningfully in the financial year 2027. Elevated spending has weighed on trailing 2-month free cash flow, which deteriorated from US$14.8 billion to negative US$42.4 billion. Nevertheless, the ratio of backlog to annual capital expenditure improved from 1.9 times in the financial year 2025 to 2.6 times in the third quarter of 2026, suggesting contracted demand is growing faster than infrastructure investment. With newly deployed AI capacity being absorbed almost immediately, the analyst believes robust demand visibility supports elevated capital expenditure despite near-term free cash flow pressure. Outlook Amazon guided fourth-quarter 2026 revenue to be between US$240.0 billion and US$247.0 billion, representing 12.5 to 15.7 per cent year-on-year growth, along with an approximately 60 basis-point foreign exchange headwinds. Fourth-quarter 2026 operating income is expected to be between US$28.5 billion and US$33.5 billion, compared with US$25.0 billion in the fourth quarter of 2025. Capital expenditure in the financial year 2026 is expected to remain at US$220 billion, representing a 67 per cent year-on-year increase. We view management's projection of over 40 per cent AWS revenue growth in both the financial years 2027 and 2028 positively, particularly given its unusually long guidance horizon and visibility into customer commitments extending into the financial year 2029. While near-term free cash flow remains under pressure, strong demand visibility and improving infrastructure utilisation support the long-term investment case, with monetisation expected to accelerate as capacity comes online. Recommendation and Target Price We upgrade our recommendation from ACCUMULATE to BUY, with an increased target price of US$330, up from the previous US$320. The financial year 2027 revenue and adjusted PATMI estimates have been increased by 2 per cent and 3 per cent, respectively, to reflect strong AWS growth visibility, while the financial year 2027 capital expenditure estimate has been raised by 3 per cent. While aggressive capital expenditure creates free cash flow pressure, strong demand visibility supports sustained infrastructure investment, which we believe will strengthen Amazon's market leadership and create significant barriers to entry for potential competitors over the long term. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

ETF Monthly October 2026: Further Weakness Expected Across Most Asset Classes in November

Published on Nov 12, 2026 3

Brief Overview Phillip Securities Research's ETF Monthly technical analysis report for October 2026 finds that most major asset classes experienced weakness during the month. Heading into November, the ETFs tracking oil and Bitcoin are expected to consolidate sideways. Conversely, the ETFs tracking the S&P 500, US Treasury Bonds, gold, Singapore equities, and the Hang Seng Index are likely to pull back further. Investment Positives Oil Stabilising After Strong October Rally The SPDR S&P Oil and Gas Exploration and Production ETF (XOP) was the standout performer in October, surging 13.6 per cent. At the beginning of the month, the price rebounded from the upward channel support and the US$179.78 breakout level before retesting the US$200.09 swing high resistance in mid-October. The price subsequently formed a higher high in the last week of the month, signalling constructive momentum. We expect the price to consolidate sideways in November, suggesting the rally may pause rather than reverse. The current price is US$203.76, with a buy zone identified at US$172.00 to US$180.00 and a sell zone at US$188.00 to US$200.00. Bitcoin Consolidation May Provide Support The ProShares Bitcoin Strategy ETF (BITO) ended a three-month winning streak with a sharp 8.5 per cent decline in October. The price broke down through the US$11.16 level at the beginning of the month, consolidated sideways, and then broke below the US$10.64 level on the last day of October. Despite this weakness, we expect the price to consolidate sideways in November, potentially finding support on a retest of the US$10.03 swing low formed in mid-September 2026. The current price stands at US$10.23, with a buy zone at US$10.70 to US$11.15 and a sell zone at US$11.66 to US$12.50. Investment Challenges Gold Breaks Key Support The SPDR Gold MiniShares Trust (GLDM) tumbled for the second consecutive month, falling 6.5 per cent in October. The price consolidated sideways for most of the month before breaking below US$80.65 and the key horizontal support level at US$78.43 on the final day of the month. We expect the price to extend its weakness in November and potentially retest the US$73.40 range-consolidation resistance level formed in mid-September 2026, representing a 4.4 per cent downside from the current price. US Treasury Bonds Under Pressure The iShares 7-10 Year Treasury Bond ETF (IEF) faces a challenging technical outlook. The current price is US$91.76, with a buy zone identified at US$90.70 to US$91.40 and a sell zone at US$91.75 to US$92.30. We expect the ETF to pull back in November. Singapore Equities Extend Decline The SPDR Singapore Equities ETF (ES3) fell for the second consecutive month, tumbling 5.5 per cent in October. At the beginning of the month, the price broke below the S$5.71 support level and subsequently consolidated sideways, retesting the uptrend support line formed since June 2025. We expect the price to extend its weakness in November if it breaks below the uptrend support line at S$5.44. Price could retest the next support level at S$5.34, a previous swing high formed at the end of June 2026, representing a 2 per cent downside from the current price of S$5.45. The buy zone is identified at S$5.23 to S$5.34, and the sell zone at S$5.51 to S$5.59. Hang Seng Downtrend Deepens The Hang Seng China Enterprises Index ETF (2828) pulled back for the third consecutive month, declining 4 per cent in October. The price bounced to form a lower high in the first half of the month before breaking down through the HKD82.84 level in the second half to extend its downtrend. We expect the price to extend its weakness in November and potentially retest the swing low support level at HKD75.29 formed at the end of June 2026, representing a 6.8 per cent downside from the current price of HKD80.82. The buy zone is set at HKD75.25 to HKD78.80, and the sell zone at HKD81.70 to HKD82.85. S&P 500 Expected to Retreat We expect the ETF tracking the S&P 500 to pull back in November, placing it among the majority of asset classes facing near-term downward pressure. Outlook The November outlook across asset classes is predominantly cautious. Five of the seven ETFs covered — those tracking the S&P 500, US Treasury Bonds, gold, Singapore equities, and the Hang Seng Index — are expected to pull back. Only the oil and Bitcoin ETFs are expected to consolidate sideways, offering relative stability in an otherwise weak technical environment. The most significant potential downside is in the Hang Seng China Enterprises Index ETF, where we identify a possible 6.8 per cent decline to support, followed by gold with a potential downside of 4.4 per cent. Summary of Technical Levels For investors monitoring entry and exit points, we have provided the following buy and sell zones: US Treasury Bonds (IEF): Buy zone US$90.70 to US$91.40; Sell zone US$91.75 to US$92.30. Oil (XOP): Buy zone US$172.00 to US$180.00; Sell zone US$188.00 to US$200.00. Bitcoin (BITO): Buy zone US$10.70 to US$11.15; Sell zone US$11.66 to US$12.50. Singapore Equities (ES3): Buy zone S$5.23 to S$5.34; Sell zone S$5.51 to S$5.59. Hang Seng (2828): Buy zone HKD75.25 to HKD78.80; Sell zone HKD81.70 to HKD82.85. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

Halyk Bank: Balancing Yield And Growth

Published on Nov 11, 2026 46

Investment Overview Kazakhstan's largest bank by assets, Halyk Bank (KASE: HSBK), offers an attractive dividend yield, but slowing earnings growth and rising credit risks raise questions about the sustainability of future payouts. Price/book compares the share price with the bank's net worth per share. Net interest margin is what the bank keeps from lending after paying for deposits. Return on equity is the profit earned on shareholders' money. Still Earning Over KZT 200 Billion A Quarter, After A Record 2025 Quarterly Net Income, KZT Billion Q1 2025 to Q2 2026 are actual results. The Q3 and Q4 2026 bars are an illustration, not an analyst forecast. The orange line is management's ~KZT 1 trillion target for 2026 spread evenly across four quarters. Source: JSC Halyk Bank, Interim Condensed Consolidated Financial Information for the Six Months Ended 30 June 2026 (Unaudited). Why It Is Interesting• Number one in Kazakhstan by assets, loans, deposits and net income (40.2% of sector profit in Q2).• High dividend: 2026 payouts of KZT 58.19 per share represent approximately 15.7% of the price, and about 60% of 2025 profit was distributed.• Strong capital cushion: 19.0% core capital ratio vs a 9.5% minimum, though it fell from 21.0% in March after dividend payments.• Lending recovered in Q2 (net loans +4.0% on the quarter), and the stock trades near 1.1x book.• Growing economy: Kazakhstan's GDP rose 4.2% in January-September 2026, led by non-resource sectors, and system-wide loans are up about 14% and deposits 17% on a year ago.• Large customer base: 8.6 million monthly super-app users, and active Halyk salary cards equal about 39% of Kazakhstan's employed population. Be Careful• Profit is falling: 1H net income down 15.3%, and Q2 was the lowest in two years.• Regulation is squeezing margins: higher central-bank reserve requirements cut the net interest margin to 6.8% from 7.3%, and tighter retail-lending rules have hurt fees.• Bad loans are rising: loans overdue by more than 90+ days increased to 5.3% of total loans (up from 4.3% at year-end, 3.0% a year ago), and loan-loss charges rose 69%.• The yield looks high partly because 2025 was a record profit year.• Trading is thin, and a controlling shareholder holds most of the stock. Who It May Suit: Dividend-seeking investors who are comfortable with frontier market risks, including profit volatility, share price swings, and lower liquidity. If you hold it, keep it to a small slice of your portfolio. Halyk Bank: The Details What It Does Halyk is the country's largest bank, with KZT 22.0 trillion of assets. About 82% of its income comes from lending, with the rest from foreign-exchange and securities gains (11%), fees (7%) and insurance and other (about 1%). It has three customer businesses: retail banking (B2C, 34% of loans), SME banking (17%) and corporate banking (48.5%), with SME and corporate together forming its B2B arm. The bank also offers insurance, brokerage and leasing services, and has operations in Georgia and Uzbekistan. What Changed In 1H 2026, And Why It Matters What Happened Why It Matters Profit fell 15%. Net income was KZT 447.6B vs KZT 528.6B a year ago, and Q2 (KZT 212.8B) was the lowest in two years. Profit funds dividends and supports the share price, so the trend matters more than any single quarter. Funding costs rose faster than income. Interest earned grew 12%, but interest paid grew 22% (deposit rates rose about 10% vs 8.7%), so core lending profit grew only 2.6%. Like a shop whose costs rise faster than its prices. Four central-bank rate cuts since June (with the policy rate reduced to 15.75% on 23 October) should gradually ease deposit costs. Banks must hold more money in reserve. Margin fell to 6.8% from 7.3% (about 7.2% without the rule change, says the company). Reserve funds generate little income. This is a regulatory squeeze rather than a pricing problem, but regulations can change again. More set aside for bad loans. Charges rose 69% to KZT 104B, and loans overdue 90+ days are 5.3% of loans (3.0% a year ago; 9.2% in retail). Households are finding it harder to repay, and money set aside cannot be paid out as dividends. Side businesses went backwards. Insurance swung to a KZT 6.1B loss (from KZT 25.8B profit), and fees fell 19.6% (company cites buy-now-pay-later rules and VAT). These businesses cushioned 2025 profit. Now the bank leans harder on lending, which is under pressure. Management's 2026 Guidance VS 1H Actuals Metric FY26 Guidance 1H 2026 Actual Our Read Net Income ~KZT 1T KZT 447.6B Behind: Needs ~KZT 276B a quarter in 2H, vs KZT 213B in Q2 Return On Equity ~29% 24.8% Behind Loan Growth 9-12% 1.2% year to date Behind Fee Income -10% (Cut from +5-10%) -19.6% Behind Margin / Bad-Loan Charges / Costs vs Income ~6.8% / ~1.5% / 18-20% 6.8% / 1.4% / 19.2% In line Dividends: How Sustainable Is The Yield? Halyk paid KZT 58.19 per share for 2025 (KZT 30.10 in May, KZT 28.09 in September), about 60% of 2025 profit, in line with recent years and above the 50% minimum in its stated policy. But the yield looks backwards: it reflects a record 2025 profit (KZT 1.06T), the September payment came from earnings kept in earlier years, and the capital ratio fell from 21.0% to 19.0% after the May payout. The next payout depends on 2026 profit, which is falling. Here is a scenario analysis: 2026 Net Income Dividend Per Share At 50% / 60% Payout Yield At KZT 370.10 (50% / 60%) KZT 1.0T (Guidance) KZT 46 / KZT 55 12.4% / 14.9% KZT 0.9T (About The 1H Pace) KZT 41 / KZT 50 11.2% / 13.4% KZT 0.8T (Further Slowdown) KZT 37 / KZT 44 9.9% / 11.9% Scenario analysis, not a forecast: it assumes about 10.9 billion shares and is before tax. Bottom Line: Unless profit recovers to management's target and the payout stays near 60%, dividend yield is expected to be lower than the ~15.44% recorded as at 10 November 2026; at the 1H pace it would be about 11-13%. Profit funds dividends, and hence it can vary. Where It Trades Halyk Bank is now offered on POEMS, with settlement in USD or SGD. It is listed on KASE (HSBK) and as GDRs in London (HSBK, one GDR = 40 shares). Average daily trading value is KZT 239.85 million (about US$0.53 million), which is small next to larger markets, so buying and selling can be harder than usual. Key Risks Bad Loans: Stage 3 loans (credit-impaired or are in default under the IFRS 9) are 8.6% of loans (vs. 6.6% a year ago), with coverage down to 58% from 73%. Economy And Currency: One bank in one economy, exposed to inflation, rates and the tenge (which also moves SGD returns). Regulations can change again. Control And Liquidity: ALMEX holds roughly 62% of the shares and Bank of New York (GDR nominee) about 35%, meaning only a small portion of the stock is available for trading, which can reduce liquidity. Growth Backdrop And What To Watch A growing economy supports loan demand and deposits. GDP grew 4.2% in January–September 2026, led by construction, manufacturing, transport and trade, and inflation has eased enough for the central bank to cut rates. Watch: Q3 results (expected mid-November 2026), loan growth, overdue loans, margin and the tenge. Trade Kazakhstan With POEMS Kazakhstan-listed shares are now available for online trading through POEMS. Trading Hours (SGT) Pre-Opening Session 2:20PM – 2:30PM Main Continuous Session 2:30PM – 8:30PM For more information, visit POEMS or contact our Global Markets Desk at talktoglobalmarkets@phillip.com.sg. Make Kazakhstan Part Of Your Global Market View Explore Kazakhstan on POEMS and discover opportunities across KASE. Trade Kazakhstan ↗ Open An Account Now! Sources JSC Halyk Bank, Interim Condensed Consolidated Financial Information for the Six Months Ended 30 June 2026 (Unaudited) https://halykbank.com/storage/830/Press-Release.pdf Halyk Group, 1H and 2Q 2026 Results Presentation (August 2026) https://halykbank.com/storage/831/Presentation.pdf Market data: Bloomberg, 28 Oct 2026; US$ at about KZT 452 Q3/Q4 2025 profit: Halyk Bank financial statements https://halykbank.com/storage/259/Financial-Statement.pdf https://halykbank.com/storage/700/Financial-Statement.pdf Dividend and shareholding details: Bloomberg GDP, loan and deposit data: Kazakh government and National Bank, Oct 2026 https://www.bis.org/speeches/20261021-results-socio-economic-development-and-execution-republican-budget-january-september-2026 Scenario analysis and income splits are our own calculations; the Q3 results date is an estimate. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

Oracle Corp: BUY Maintained with Target Price of US$225 as Positive Free Cash Flow Comes into Sight

Published on Nov 11, 2026 25

Brief Overview Oracle held its Investor Day on 28 October 2026 as part of AI World in Las Vegas, outlining a path to positive free cash flow (FCF) from FY29e. The company targets 10GW of data centre capacity by end-FY28, with FCF expected to turn positive in the second half of FY28 as the infrastructure build-out matures. Phillip Securities Research maintains a BUY recommendation with an unchanged target price of US$225, retaining FY27-31e estimates. We forecast US$255 billion in FY31e revenue, representing a 30% five-year compound annual growth rate (CAGR), driven by Oracle Cloud Infrastructure (OCI) capacity deployment and conversion of the US$664 billion remaining performance obligation (RPO). Investment Positives Positive Free Cash Flow from FY29e Management expects FCF to turn positive in the second half of FY28e, with Oracle becoming self-funded from FY29e as peak FY27-28 capital expenditure eases. We forecast US$4 billion in FCF for FY29e. The inflection follows the major infrastructure build-out, with Oracle targeting 10GW by end-FY28 (May 2028), including over 7GW of incremental capacity from an estimated current base nearing 3GW (a total of 1.2GW by end-FY26, 850MW in 1Q27, and the remainder in the current quarter). Alternative Financing Easing Cash Requirements Vendor financing, customer prepayments, and bring-your-own-hardware (BYOH) arrangements could reduce upfront cash needs by approximately 50%, limiting Oracle's additional external funding requirement through FY30 to US$20 billion. By way of illustration, vendor financing reduces the first-two-year capital requirement for a 1GW project from US$37 billion to US$18 billion, while BYOH could lower the requirement further to US$6 billion or less per GW, albeit at lower reported revenue but with higher margins and return on investment. Improving Revenue Per GW Oracle's revenue per GW remains below Microsoft's, but the gap should narrow through FY28-30e as new capacity ramps and the US$664 billion RPO converts into revenue. Despite a much smaller cloud revenue base, Oracle has a similarly sized backlog, offering greater catch-up potential if capacity is delivered and monetised as planned. As capital expenditure eases after FY28, higher revenue per GW translates into stronger FCF and improved infrastructure economics. We forecast a 55% increase in revenue per GW to US$17.5 billion in FY30e. Spreading Deployment Risk Oracle is reducing reliance on any single site or geography, with less than half of its eventual 10GW capacity in gigawatt-scale sites and the rest in smaller data centres globally. The 850MW delivered in 1Q27 was spread across 38 projects in 11 countries. OCI's capacity fungibility helps mitigate utilisation risk — a 512-GPU cluster (64 nodes by 8 NVIDIA/AMD GPUs) can serve up to 32 customers, with capacity reallocated between customers within hours, achieving 98% GPU utilisation in 1Q27. Oracle is also diversifying accelerator availability across NVIDIA, AMD, Google TPU and other architectures rather than tying OCI exclusively to one compute architecture. Monetising AI in Applications Oracle is adding usage-based billing for AI consumption alongside SaaS subscriptions, creating growth beyond seat additions. Embedded AI agents should automate more ERP workflows rather than displace ERP, with fewer manual workflows and less traditional user interface interaction. Fusion, Oracle's enterprise application suite, grew 14% year-on-year in 1Q27, faster than Cloud Applications at 10%. Use cases include automating finance ledger reconciliation and checking HR overtime discrepancies. Adoption is already meaningful, with 500 billion tokens consumed in September 2026 (up 23% month-on-month) and over 150 million embedded Fusion AI uses in 1Q27, though monetisation remains early as the pricing model was introduced only months ago. Strong Revenue and Backlog We expect US$255 billion in group revenue by FY31e, representing a 30% five-year CAGR, driven by OCI deployment and OpenAI backlog conversion. Over 90% of the US$664 billion RPO is tied to infrastructure. Customer concentration is declining, with over 1,000 OCI AI infrastructure customers now diversifying the backlog. Investment Challenges Temporary Margin Pressure We expect near-term adjusted operating margin dilution from 43% in FY26 to 37% in FY28e, below historical levels. The pressure reflects the growing mix of lower-margin OCI, where AI infrastructure projects generate 35% gross margin and 34% operating margin, compared with the higher-margin SaaS and database businesses. Early-Stage AI Monetisation While AI adoption is scaling rapidly within Oracle's application suite, monetisation remains early. The usage-based pricing model for AI consumption was introduced only months ago, and the extent to which it will contribute meaningfully to revenue in the near term remains to be seen. Outlook Margins should recover to approximately 40% by FY30 as data centres ramp up and capital expenditure eases. We forecast US$26.10 adjusted EPS in FY31e, implying a 27% five-year CAGR. The path to positive FCF from FY29e, combined with alternative financing structures that reduce upfront cash requirements by about 50%, supports the thesis that Oracle can achieve self-funded growth from FY29 onwards. Revenue diversification through a broadening customer base of over 1,000 OCI AI infrastructure customers should further strengthen the outlook. Recommendation & Target Price Phillip Securities Research maintains a BUY recommendation on Oracle Corp with an unchanged target price of US$225. FY27-31e estimates are maintained. The conviction is underpinned by the anticipated path to positive FCF from FY29e, the US$664 billion RPO providing revenue visibility, and improving infrastructure economics as capacity scales. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

Nanofilm Technologies: Industrial Segments Drive Growth as Analysts Maintain BUY with S$1.20 Target Price

Published on Nov 11, 2026 24

Brief Overview Nanofilm Technologies International Limited released its third-quarter 2026 update with limited financials. Nine-month 2026 revenue and gross profit came in within expectations, at 70 per cent and 74 per cent of Phillip Securities Research's full-year 2026 forecasts respectively. Third-quarter revenue rose 3 per cent year-on-year to S$74 million, though a 19 per cent decline in the Advanced Material – Consumer (AMC) segment was offset by strong performances in Nanofabrication and Industrial Equipment. Phillip Securities Research maintains a BUY recommendation with an unchanged target price of S$1.20. Investment Positives Growth in Industrial, Automotive, and Semiconductor Segments Nanofilm's industrial-facing segments delivered robust results in the third quarter. Advanced Material – Industrial (AMI) revenue increased 8 per cent year-on-year to S$16 million, propelled by decorative and functional coatings for metal machining and medical applications in Europe. This steady expansion in industrial coatings underscores the company's ability to grow beyond its consumer electronics core. The Industrial Equipment segment (IEBU) was a standout performer, with revenue surging 66 per cent year-on-year to S$7 million. This growth was driven by the delivery of new orders of advanced printed circuit board (PCB) drill bit equipment, a product line that is becoming an increasingly meaningful contributor to the revenue base. Strong Nanofabrication Performance The Nanofabrication segment (NFBU) recorded a remarkable 120 per cent year-on-year gain in third-quarter revenue, reaching S$12 million. The primary driver was a new health sensor programme in smartwatches. This substantial increase helped offset weakness in the consumer segment and highlights Nanofilm's success in securing new technology applications. Margin Expansion Underway Third-quarter gross margins expanded by 5 percentage points year-on-year to 45 per cent, marking the highest level since the 2022 financial year. The margin improvement was underpinned by ongoing cost optimisation efforts and the commercialisation of new programmes in PCB drill bit equipment. This trajectory suggests that Nanofilm's operational efficiency is gaining traction as newer, higher-margin revenue streams scale up. Revenue Diversification Reducing Concentration Risk A notable positive from the quarter is the declining share of revenue attributable to the AMC segment, which fell to 53 per cent in the third quarter of 2026 from 67 per cent in the same period a year earlier. This diversification away from reliance on key customer Z lowers Nanofilm's concentration risk and positions the company on a more balanced footing. Investment Challenges Consumer Segment Declines The primary headwind in the quarter came from the AMC segment, where revenue dropped 19 per cent year-on-year to S$39 million. The decline was attributed to delays in key customer Z's flagship programme and substrate changes. While the flagship programme reached full capacity in late third-quarter 2026 and is expected to support fourth-quarter growth, the near-term impact on the consumer segment was material. However, we noted that the decline in AMC revenue was partially offset by the 120 per cent year-on-year gain in NFBU revenue, driven by the health sensor programme. This suggests that while the consumer segment faces temporary pressure, other parts of the business are compensating. Outlook Phillip Securities Research expects Nanofilm's flagship smartphone programme to support fourth-quarter 2026 revenue growth, as the programme has reached full-capacity production. Customer Z has also raised its production targets, which should underpin volume growth heading into the 2027 financial year. We do not expect the recent screen issues to have a material impact on Nanofilm. Margins are expected to improve in the 2026 and 2027 financial years, supported by operating leverage from higher utilisation rates. Looking further ahead, growth in the 2027 financial year is expected to be driven by PCB drill bit equipment, functional hinge coatings for smartphones, and coatings in semiconductors, including wafer lapping carriers and anti-static discharge (ASD) applications. These growth avenues, combined with the ongoing revenue diversification, are expected to reduce reliance on any single customer or segment. Recommendation & Target Price Phillip Securities Research maintains a BUY recommendation on Nanofilm Technologies International Limited with an unchanged target price of S$1.20. The full-year 2026 revenue and net profit after minority interest forecasts remain unchanged. Our conviction is supported by the expectation that the flagship smartphone programme, PCB drill bit equipment, and semiconductor coatings will be the key growth drivers in the coming financial year. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

INVESTMENT

LEVERAGE

PROTECTION

THEMATIC

OTHER SERVICES

ACCREDITED INVESTOR

EDUCATION

RESEARCH

TOOLS

New to POEMS?

FUNDING

ACCOUNT MECHANICS

SEGMENTS

Account Opening

QUICK GUIDE

Retail price index (RPI)