Return on Equity (ROE)

What Is Return on Equity (ROE)?

Return on Equity is measured by dividing a company’s net income by its shareholder equity. The return on equity (ROE) is a measure of a company’s profitability and indicates how effectively the company is making profit. 

Return on Equity (ROE)

Formula and Calculation of ROE

ROE is expressed in percentage terms and can be calculated for any company provided that the net income and equity are not negative. This formula is used to calculate ROE; 

ROE = Net IncomeAverage / Average Shareholder′s Equity

  

Interpreting the ROE Metric

ROE tells us about a company’s profitability and how effectively it makes money. A good ROE indicates effective production. However, an extremely high ROE can be an indicator of problems like excessive debt and inconsistent profit. A low ROE metric ratio indicates the bad shape of the company.  

 

Variations on the ROE Calculation

The ROE calculation can be affected by various factors, of which the most important is leverage. A debt-financed company is more likely to have a lower after-tax profit than an equity-financed corporation due to loan interest payments. Calculations of ROE can be affected by this as excessive debts and inconsistent profits lead to an extremely high ROE.  

ROE Formula Drivers

Operating efficiency, asset use efficiency, and financial leverage drive the ROE formula. Operating efficiency means the net income divided by the total revenue. Asset use efficiency measures how effectively assets are used by a company to generate profits. Financial leverage is an analysis that is used to assess a company’s use of debts to finance its assets.   

 

The DuPont formula

The DuPont analysis is a methodology for analysing fundamental performance and is used to compare the operational efficiency of two companies that are identical. The DuPont analysis is a strategy that breaks down ROE into three parts to understand the changes that take place over time. 

ROE = Net Income /Sales × Sales/Total Assets × Total Assets/Average Shareholder′s Equity

 

 

Impact of Leverage on ROE

As equity equals assets minus total debt, a company’s equity as a percentage of assets can be reduced by raising debt. This can be understood from the following example: 

Annual Profits = $3,00,000 

Shareholder’s Equity =  $5,00,000 

ROE = 3,00,0005,00,0003,00,0005,00,000

= 0.6% 

 

Loan = $2,50,000 

New Shareholder’s Equity = $2,50,000 (assets – liabilities)  

ROE =

3,00,0002,50,0003,00,0002,50,000

= 1.2% 

Return on Equity and Stock Performance

ROE can be used to estimate long-term growth rates and dividend growth rates, provided the ratio is close to or slightly above the peer group average. ROE is a good place to start if one wants to estimate a stock’s future and dividend growth rate. These two calculations are functions of one another, and they can be used to compare similar businesses. 

 

ROE vs ROA

There are significant differences between ROE and ROA even if both of them are used to measure profits. Return on Assets (ROA) takes leverage or debt into account but ROE does not. ROE uses net income and divides it by shareholder equity. There are differences between their formulas as well; 

ROA = Net Income/Total Assets × 100

ROE = Net Income/Shareholder Equity × 100

ROE and Capital Raising

A rising return on investment (ROI) indicates that a corporation is generating more profits with less capital. It also shows how successfully a company’s management manages shareholder money. A higher ROI is normally preferable, however, a declining ROE may suggest inefficient use of equity capital.  

 

Using Return on Equity to Identify Problems

Problems like excessive debt and inconsistent profits can easily be identified using ROE. This is because excessive debt and inconsistent profits yield a very high ROE, which in itself is an indicator of problems. It can also be used to identify problems or factors that can pose a risk to a company’s profitability.  

 

Limitations of ROE

An important limitation of ROE is ROE being calculated as too high. This indicates various problems like excessive debt or inconsistent profits. This is a limitation as it then cannot be used to assess a company’s profitability. It can also be misleading when new companies are in question as there is a high requirement of capital which results in low ROE. It can also be easily manipulated by decreasing or increasing rates accordingly.  

 

Frequently Asked Questions

If ROE is too high, it indicates risk which can cause many problems. This can lead to inconsistent profits due to an extremely low denominator, which gives you a misleading ROE. Excess debt can also result in ROE, which means that there is low equity. It can also show a negative net income.

ROE tells us about a company’s profitability and how effectively it makes money. A good ROE indicates effective production and the company is considered to be in good shape if ROE is above 15%. A high ROE, however, is not a good indicator. A good ROE lies between 15% and 20%.

A company can have a low ROA even if it has a high ROE. This indicates that while the company is successful in managing its equity, it is not as successful in managing its assets. This could be because ROA considers debt. Therefore, it is better to keep the two separate and use ROA when debts are to be considered and use ROE when there is a question of equity management.  

 

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    Sea Ltd. Maintains Strong Growth Momentum Across All Segments

    Published on Mar 18, 2026 33 

    Company Overview Sea Ltd. is a leading Southeast Asian technology conglomerate operating three core businesses: Shopee (e-commerce), Monee (digital financial services), and Garena (digital entertainment). The company has established itself as a dominant player in the region's digital economy, leveraging synergies across its platforms to drive user engagement and monetisation. Financial Performance and Outlook Sea Ltd. delivered solid fourth-quarter 2025 results with revenue meeting expectations, though profit after tax and minority interests (PATMI) underperformed due to strategic investments in Shopee's logistics, fulfilment, and user-engagement capabilities. For the full year 2025, revenue and PATMI reached 103% and 89% of estimates respectively. The company demonstrated robust growth with revenue increasing 38% year-on-year whilst PATMI surged 73% year-on-year. Phillip Securities Research maintains its BUY recommendation with an unchanged target price of US$170, derived from a discounted cash flow model using a terminal growth rate of 4.0% and weighted average cost of capital of 7.6%. The firm has rolled forward valuations to FY26e and reduced FY26e PATMI estimates by 1% to account for increased e-commerce investments. Strong Performance Across All Business Segments Shopee continued its impressive growth trajectory with gross merchandise value (GMV) rising 29% year-on-year and gross orders increasing 30% year-on-year. The platform achieved stronger monetisation through advertising, with ad revenue jumping 70% year-on-year driven by a 20% increase in ad-paying sellers and 45% growth in average ad spend per seller. Monthly active buyers grew 15% year-on-year, whilst innovative initiatives like Shopee VIP membership saw subscribers double in just one quarter. Management expects this momentum to persist, guiding for 25% GMV growth in FY26e. Monee demonstrated exceptional expansion with loan principal surging 80% year-on-year to US$9.2 billion. Active credit users increased 40% year-on-year following the transition from a whitelist model to an "all-can-apply" approach. The 90-day non-performing loan ratio remained stable at 1.1%, supported by enhanced underwriting models utilising ecosystem data and artificial intelligence. Monee's adjusted EBITDA exceeded US$1 billion in FY25, now surpassing Shopee as a profit contributor. Garena maintained its position as a durable revenue generator with bookings growing 37% year-on-year to US$2.9 billion. Free Fire achieved two consecutive years of over 30% year-on-year bookings growth, supported by major intellectual property collaborations and newer titles such as EA SPORTS FC Mobile. Frequently Asked Questions Q: What is Phillip Securities Research's recommendation and target price for Sea Ltd.? A: Phillip Securities Research maintains a BUY recommendation with a target price of US$170, unchanged from previous estimates. Q: How did Sea Ltd.'s financial performance compare to expectations in 4Q25? A: Revenue was in line with expectations, whilst PATMI underperformed due to elevated investments in Shopee's logistics, fulfilment, and user engagement. Full-year revenue and PATMI reached 103% and 89% of estimates respectively. Q: What drove Shopee's strong performance in the quarter? A: Shopee's growth was driven by GMV increasing 29% year-on-year, gross orders rising 30% year-on-year, and stronger monetisation through advertising revenue growth of 70% year-on-year. Q: How is Monee's loan portfolio performing in terms of quality? A: The 90-day non-performing loan ratio remains stable at 1.1%, supported by improved underwriting models that leverage ecosystem data and AI technology. Q: What are management's expectations for Shopee's growth in FY26e? A: Management expects momentum to continue and has guided for 25% GMV growth in FY26e, supported by further investments in fulfilment, logistics, and user engagement. Q: Which business segment is the largest profit contributor for Sea Ltd.? A: Monee has become a key profit driver with FY25 adjusted EBITDA exceeding US$1 billion, now surpassing Shopee and ranking second to Garena in terms of profit contribution. Q: How has Garena performed over the past two years? A: Garena has demonstrated durability with Free Fire achieving two consecutive years of over 30% year-on-year bookings growth, whilst FY25 bookings increased 37% year-on-year to US$2.9 billion. This article has been auto-generated using AI tools. 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.

    SATS Upgraded to Buy on Strong Cargo Performance

    Published on Mar 17, 2026 74 

    Company Overview SATS Ltd is a leading aviation services company that provides ground handling and cargo services across multiple regions, including Europe, Asia-Pacific, and the Americas. The company operates cargo facilities and ground handling services for airlines globally, with a significant presence in key aviation hubs. Strong Third Quarter Performance SATS delivered impressive third-quarter results that exceeded analyst expectations, with PATMI reaching 34% of the full-year forecast for the quarter alone. The company's cargo volumes demonstrated robust growth of 7.3% year-on-year to 2.6 million tonnes, driven primarily by strong performance in European and Asia-Pacific markets. Revenue climbed 8% year-on-year to S$1.6 billion in the third quarter, whilst PATMI surged 20.4% to S$84.7 million. This growth was underpinned by the substantial cargo volume increase, with Europe and APAC routes successfully offsetting a 7% decline in the Americas region. Contract Wins Drive Future Growth The company has secured several significant new contracts that are expected to reinforce its cargo strength going forward. These include cargo contracts with China cargo-based operations, Saudia cargo, Azul, and Allegiant Air. The commencement of these new contract wins, combined with additional leasing and capital expenditure initiatives, provides a solid foundation for continued growth. Regional Challenges and Operational Adjustments Despite the overall positive performance, SATS faces some regional challenges, particularly in its US ground handling operations. Lower cargo volumes in this segment have rendered certain stations economically unviable, prompting the company to undertake renegotiations of pricing structures and establish volume thresholds to improve operational efficiency. Upgraded Rating and Target Price Phillip Securities Research has upgraded SATS to a BUY rating with a significantly higher DCF target price of S$4.44, representing an increase from the previous target of S$3.84. This upgrade reflects raised FY26 and FY27 earnings expectations following a 13% increase in FY26 PATMI forecasts. The revision incorporates incremental cargo rate increases amid tightening cargo capacity in the Middle East region and higher projected cargo volumes. New facilities, including the expanded Pathum Thani kitchen and Noida airport cargo facility, are expected to ramp up operations and achieve profitability in the coming quarters. SATS currently trades at 19.5x FY26 price-to-earnings ratio. Frequently Asked Questions Q: What was SATS' cargo volume growth in the third quarter? A: SATS achieved cargo volume growth of 7.3% year-on-year in the third quarter, reaching 2.6 million tonnes. Q: Which regions drove the strong cargo performance? A: Europe and Asia-Pacific routes were the primary drivers of growth, successfully offsetting a 7% decline in the Americas region. Q: What new contracts has SATS secured? A: SATS has won new contracts including China cargo operations, Saudia cargo, Azul, and Allegiant Air services. Q: What is Phillip Securities Research's new recommendation and target price? A: Phillip Securities Research upgraded SATS to a BUY rating with a DCF target price of S$4.44, increased from the previous target of S$3.84. Q: What challenges is SATS facing in its operations? A: The company is experiencing lower cargo volumes in its US ground handling business, making some stations economically unviable and requiring pricing renegotiations and volume threshold establishment. Q: How much did SATS raise its FY26 PATMI forecast? A: SATS raised its FY26 PATMI forecast by 13% due to incremental cargo rate increases and higher projected cargo volumes. Q: What new facilities are expected to contribute to future profitability? A: The expanded Pathum Thani kitchen and Noida airport cargo facility is expected to ramp up operations and become profitable in the coming quarters. Q: At what valuation multiple does SATS currently trade? A: SATS currently trades at 19.5x FY26 price-to-earnings ratio. 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.

    Hyphens Pharma International: Navigating Challenges with Strategic Focus

    Published on Mar 17, 2026 15 

    Company Overview Hyphens Pharma International is a pharmaceutical company operating across ASEAN markets with a diversified portfolio spanning specialty pharmaceuticals, proprietary brands, and medical hypermart operations. The company has been expanding its reach across Southeast Asia whilst making strategic inroads into European markets. Financial Performance and Strategic Refresh Hyphens Pharma delivered FY25 results broadly in line with expectations, with revenue and adjusted profit after tax and minority interests achieving 99% and 97% of forecasts respectively. The second half of FY25 demonstrated resilience, with adjusted PATMI rebounding 27% year-on-year to S$5.94 million, driven by the discontinuation of low-margin products and enhanced cost controls. However, the overall financial picture was mixed. Revenue declined 8% year-on-year to S$97.8 million in 2H25, primarily due to a 23% drop in Vietnamese operations. The company faced multiple headwinds in Vietnam, including elevated Sterimar, a natural, drug-free seawater nasal spray, inventory levels, deprioritisation of contrast media products, currency weakness, and strategic product discontinuations. Operational Challenges and Strategic Positives The company encountered significant operational hurdles, particularly in Vietnam, which necessitated a strategic refresh. We believe the company faced challenges in passing through higher-priced Euro specialty products to customers, prompting a realignment towards better-margin products. It allowed gross profit margins to improve substantially, jumping 5.7 percentage points year-on-year to 41.9% in 2H25, demonstrating the effectiveness of the margin enhancement strategy. The positive momentum was partially offset by increased provisions totalling several million dollars, including inventory write-offs of S$1 million, impairment of receivables worth S$0.6 million, and foreign exchange translation losses of S$0.8 million, all largely related to Vietnamese operations. Growth Prospects and Valuation Phillip Securities Research maintains a BUY recommendation with a target price of S$0.40, raising FY26 PATMI estimates by 10% to S$12.2 million based on improved gross margin projections. The company achieved a significant milestone in January with an out-licensing agreement for Cerapro MED, an atopic dermatitis treatment, across six European countries. Additionally, Winlevi anti-acne products are gaining traction in Singapore and Malaysia. Trading at an attractive 8x price-to-earnings ratio with net cash of S$26.8 million representing 27% of market capitalisation, the company appears well-positioned for recovery as Vietnamese operations stabilises and growth drivers including medical aesthetics and e-pharmacy initiatives gain momentum. Frequently Asked Questions Q: What was Hyphens Pharma's financial performance in FY25? A: FY25 revenue and adjusted PATMI were within expectations at 99% and 97% of forecasts respectively. 2H25 adjusted PATMI rebounded 27% year-on-year to S$5.94 million, though headline earnings declined due to FX translation losses and extraordinary provisions. Q: Why did revenue decline in 2H25? A: Revenue declined 8% year-on-year to S$97.8 million in 2H25, primarily driven by a 23% drop in Vietnamese operations due to elevated inventory, currency weakness, and strategic product discontinuations. Q: What challenges did the company face in Vietnam? A: Vietnam operations encountered elevated Sterimar inventory, deprioritisation of contrast media, weak currency conditions, discontinuation of several products, and difficulties in passing through higher-priced Euro specialty products to customers. Q: How did gross margins perform? A: Gross profit margins improved significantly, jumping 5.7 percentage points year-on-year to 41.9% in 2H25, helping gross profit grow despite declining revenue through discontinuation of low-margin products like Physiolac infant formula. Q: What is Phillip Securities Research's recommendation? A: Phillip Securities Research maintains a BUY recommendation with a target price of S$0.40, raising FY26 PATMI estimates by 10% to S$12.2 million based on higher gross margin estimates. Q: What are the key growth drivers for 2026? A: Expected growth drivers for 2026 include Winlevi anti-acne products, medical aesthetics, and Wellaway e-pharmacy operations, alongside the strategic refresh of Vietnam's product portfolio. Q: What significant milestone did the company achieve? A: In January, Hyphens reached a milestone with an out-licensing agreement for Cerapro MED, an atopic dermatitis treatment, into six European countries, marking successful expansion into European markets. Q: What is the company's current valuation and financial position? A: Hyphens trades at an attractive 8x price-to-earnings ratio with net cash of S$26.8 million, representing 27% of its market capitalisation, providing a strong financial foundation for future growth.

    City Developments Limited Delivers Record Performance Through Strategic Asset Recycling

    Published on Mar 17, 2026 19 

    City Developments Limited, a prominent Singapore-based property developer, has reported exceptional FY25 results that significantly exceeded market expectations. The company operates across property development, hotel operations, and investment segments, maintaining a diversified portfolio spanning Singapore, the UK, China, and other international markets. Outstanding Financial Performance The company achieved remarkable FY25 PATMI of S$630 million, representing a substantial 213% year-on-year growth that came in 88% above our estimates. This exceptional performance was primarily driven by strong Singapore residential sales and significant capital recycling gains from approximately S$2 billion in divestments during FY25, including the notable sale of its 50.1% stake in South Beach. Revenue growth was strong with gross revenue reaching S$3.587 billion compared to S$3.271 billion in FY24, marking a 9.7% increase. The property development segment was the primary growth driver, supported by higher contributions from Singapore projects and strategic divestments including the Ransome's Wharf site in London and the office component of Suzhou Hong Leong City Centre in China. Record Residential Sales Achievement The company delivered record-breaking residential sales performance in FY25, with the Group and its joint venture associates selling 1,657 units (including Executive Condominiums) valued at S$4.35 billion. This represents the highest sales volume in the company's history, significantly surpassing FY24's performance of 1,489 units worth S$2.97 billion. The strong momentum was particularly driven by successful launches of The Orie and Zyon Grand, which achieved impressive take-up rates of 95% and 87% respectively. Enhanced Shareholder Returns and Future Outlook City Developments has revised its dividend policy to establish a minimum payout of 35% of reported PATMI, providing greater clarity for shareholders. The company declared a final dividend of 25 cents per share, bringing total FY25 dividends to 28 cents per share, representing a 40% payout ratio. Phillip Securities Research maintains a BUY recommendation with a higher RNAV target price of S$11.32, increased from the previous S$9.62, implying a 25% discount to the revised RNAV of S$15.09. The research house raised its RNAV by 17% after accounting for recent investments, divestments, and higher valuations of the living sector portfolio. Strategic Portfolio Optimisation Looking ahead, the company has outlined plans for continued asset recycling, with immediate intentions to exit its legacy UK portfolio valued at approximately S$800 million, comprising development sites and residential projects. A strategic review is currently underway, with updates expected by mid-2026. The company is also exploring fund management initiatives that could involve recycling non-core assets into private funds. With a robust development pipeline of 1,820 units, including the recently secured Tanjong Rhu Road site and the planned Lakeside Drive site launch in 2026, City Developments appears well-positioned to maintain its strong residential sales momentum into FY26. Frequently Asked Questions Q: What were City Developments' key financial highlights for FY25? A: The company achieved FY25 PATMI of S$630 million, representing 213% year-on-year growth and exceeding analyst estimates by 88%. Gross revenue reached S$3.587 billion, up 9.7% from the previous year. Q: What drove the exceptional performance in FY25? A: The strong results were primarily driven by robust Singapore residential sales and substantial capital recycling gains from approximately S$2 billion in divestments, including the sale of the company's 50.1% stake in South Beach. Q: How did the company perform in residential sales? A: City Developments achieved record residential sales in FY25, selling 1,657 units valued at S$4.35 billion through the Group and its joint ventures, the highest in the company's history. Key projects The Orie and Zyon Grand achieved 95% and 87% sales respectively. Q: What is the company's dividend policy? A: The company has revised its dividend policy to a minimum of 35% of reported PATMI, which includes gains from divestments. For FY25, a final dividend of 25 cents per share was declared, bringing total dividends to 28 cents per share. Q: What is Phillip Securities Research's recommendation? A: Phillip Securities Research maintains a BUY recommendation with a target price of S$11.32, increased from S$9.62, implying a 25% discount to the revised RNAV of S$15.09. Q: What are the company's future plans for asset management? A: The company plans to exit its legacy UK portfolio worth approximately S$800 million and is conducting a strategic review with updates expected by mid-2026. Fund management initiatives may involve recycling non-core assets into private funds. Q: What is the outlook for residential sales? A: Strong residential sales momentum is expected to continue into FY26, supported by a robust development pipeline of 1,820 units, including the recently secured Tanjong Rhu Road site and the planned Lakeside Drive site launch in 2026. Q: Which business segments contributed to the growth? A: The property development segment was the primary growth driver, benefiting from higher contributions from Singapore projects and strategic divestments. The hotel operations and investment segments also contributed to the overall performance.

    ComfortDelGro Corp Faces Accelerating Taxi Fleet Decline Despite Stable Overall Performance

    Published on Mar 17, 2026 17 

    Company Overview ComfortDelGro Corp Ltd operates as a major transport services provider, with significant operations spanning taxi services, bus operations, and rail services across multiple markets including Singapore, London, Australia, Manchester, and Stockholm. The company maintains a diversified portfolio of transport services, making it a key player in the regional mobility sector. Financial Performance and Market Position The company delivered FY25 results that largely met analyst expectations, with revenue and profit after tax and minority interests (PATMI) achieving 101% and 97% of forecasted figures respectively. However, underlying net profit for the fourth quarter of FY25 showed signs of weakness, declining 2% year-on-year to S$56 million, reflecting emerging operational challenges. Accelerating Taxi Fleet Contraction The most concerning development centres on ComfortDelGro's Singapore taxi operations, where the fleet is experiencing an accelerating decline. The taxi fleet contracted by 8.7% year-on-year in the fourth quarter of FY25, representing a significant deterioration from the 4.1% decline recorded in the same period the previous year. This trend is particularly troubling given that taxi rental represents a high-margin segment for the company. The operating earnings from taxi services reflected this operational pressure, falling 20% year-on-year to S$28.8 million in the fourth quarter. The intensifying competition for drivers appears to be a key factor driving this contraction, with no clear indications that the decline will stabilise in the near term. Revised Outlook and Investment Recommendation Phillip Securities Research has adjusted its earnings projections downward, reducing FY26 earnings estimates by 11% to S$215 million. The research house has also lowered its DCF target price to S$1.50 whilst maintaining an ACCUMULATE recommendation for the stock. The investment case presents a mixed picture, with several positive factors expected to support earnings performance. These include continued bus repricing benefits in London, anticipated improvements in Australian driver shortage issues, and new contract contributions from Manchester bus operations and Stockholm rail services. However, significant headwinds remain, particularly the ongoing loss of bus packages and the continued decline in Singapore's taxi fleet, which are identified as major pressure points for future earnings growth Despite these operational challenges, the company continues to offer an attractive dividend yield of 6%, providing income-focused investors with a compelling proposition in the current market environment. Frequently Asked Questions Q: What was ComfortDelGro's financial performance in FY25? A: ComfortDelGro's FY25 revenue and PATMI were within expectations at 101% and 97% of forecasted figures respectively. However, underlying net profit in 4Q25 declined 2% year-on-year to S$56 million. Q: How is the Singapore taxi fleet performing? A: The taxi fleet is experiencing an accelerating decline, contracting 8.7% year-on-year in 4Q25, which is double the 4.1% fall recorded in 4Q24. This has resulted in taxi operating earnings declining 20% year-on-year to S$28.8 million. Q: What factors are driving the taxi fleet decline? A: The contraction is attributed to intensifying competition for drivers, with no indications that this trend will stabilise in the near term. Q: What is Phillip Securities Research's recommendation and target price? A: Phillip Securities Research maintains an ACCUMULATE recommendation with a DCF target price of S$1.50, lowered from previous levels. Q: How have earnings forecasts been adjusted? A: FY26 earnings estimates have been reduced by 11% to S$215 million due to the operational challenges, particularly in the taxi segment. Q: What positive factors support the investment case? A: Earnings are expected to be supported by continued London bus repricing, improvement in Australian driver shortages, and new Manchester bus and Stockholm rail contracts. Q: What are the main risks to the company's performance? A: The primary pressure points include the loss of bus packages and the continued decline in Singapore's taxi fleet, both of which pose significant challenges to earnings growth. Q: What dividend yield does ComfortDelGro offer? A: The company pays an attractive dividend yield of 6%, making it appealing for income-focused investors. 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. 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    Singapore REITs in 2026: A Year for Selective Optimism

    Published on Mar 10, 2026 259 

    As Singapore’s interest rate environment stabilises, many investors are revisiting S-REITs as a source of income. Here’s what to consider in 2026. Singapore Real Estate Investment Trusts (S-REITs) enter 2026 at an important crossroads. After several years of volatility driven by rising interest rates, inflation, and global economic uncertainty, the sector is now moving into a more “normalised” phase. While conditions appear more supportive than in recent years, challenges have not disappeared. For income-focused investors, 2026 offers reasons for cautious optimism — but it also calls for greater selectivity and discipline. 1. Easing Interest Rate Pressure One of the biggest headwinds for S-REITs in recent years has been the sharp rise in borrowing costs. Because REITs rely on debt to acquire and manage properties, higher interest rates directly reduce profitability. By 2026, interest rates have largely stabilised and, in some cases, moderated from their peaks. This shift provides several benefits for the sector. REITs refinancing maturing loans may be able to secure more manageable borrowing costs, helping to reduce interest expenses. Lower financing costs can in turn support stronger distributable income, contributing to a more stable Distribution Per Unit (DPU) for investors. At the same time, the stabilisation of rates may improve the yield spread between S-REITs and other income-generating instruments such as bonds and fixed deposits, making REITs relatively more attractive for income-focused investors. REITs with well-staggered debt maturity profiles and a higher proportion of fixed-rate borrowings are likely to benefit the most, as they are less exposed to sudden refinancing pressures. 2. Resilient Underlying Property Fundamentals Despite broader macroeconomic uncertainty, many S-REIT sub-sectors have demonstrated resilience. Industrial and logistics REITs, for instance, continue to benefit from long-term themes such as the growth of e-commerce, supply chain diversification and the increasing need for data infrastructure. These trends have helped sustain demand for modern logistics facilities and high-quality industrial spaces. Retail REITs, particularly those focused on suburban Singapore malls, have also shown stability. Supported by domestic consumption and neighbourhood spending patterns, these malls have maintained relatively steady footfall and tenant sales even amid broader economic fluctuations. Meanwhile, healthcare and data centre REITs are often viewed as more defensive segments within the S-REIT universe. Healthcare properties benefit from long-term demographic trends such as ageing populations, while data centres are supported by the rapid growth of digitalisation and cloud computing. Across many major S-REITs, occupancy rates remain relatively high. Stable occupancy supports rental income visibility, which is critical for maintaining consistent distributions to investors. 3. Attractive Income for Long-Term Investors In 2026, S-REIT dividend yields remain relatively appealing, especially for investors prioritising steady income. Dividend yields across many REITs continue to exceed prevailing inflation rates, allowing investors to maintain real income returns. At the same time, rental income from property portfolios tends to provide more predictable cash flows compared with cyclical equities, making REITs a popular component of income-focused investment strategies. Singapore’s well-established regulatory framework for REITs also provides a degree of transparency and investor protection, which has contributed to the sector’s credibility among both local and international investors. For long-term investors, reinvesting distributions can meaningfully enhance total returns through compounding, particularly when units are accumulated during periods of market weakness. 4. Strong Governance and Transparency Singapore remains one of the most established and trusted REIT markets globally. Its regulatory framework provides a strong foundation for investor protection and contributes to the sector’s long-standing credibility among both local and international investors. The market is supported by clear and consistent disclosure standards, allowing investors to evaluate REIT performance with greater transparency. In addition, regulatory limits on leverage help ensure that balance sheets remain relatively conservative compared with many global property markets. Another key strength lies in the experience of REIT managers, many of whom are backed by reputable property sponsors with established track records in property development and asset management. This alignment between sponsors, managers and investors often supports disciplined capital management and long-term asset value creation. Together, these governance standards help reduce the likelihood of excessive risk-taking while providing investors with greater visibility over financial performance, portfolio quality and balance sheet strength. The Risks and Challenges for Singapore REITs in 2026 While the outlook is improving, investors should remain mindful of the potential risks that could affect the sector. 1. Interest Rates Remain a Key Variable Although interest rates have stabilised, they remain higher than the ultra-low levels seen before 2022. As a result, borrowing costs across the sector are still elevated compared with historical norms. For REITs that rely on debt financing to acquire and manage properties, this environment continues to present challenges. Highly leveraged REITs may face refinancing pressures as loans mature, particularly if they need to refinance at rates that remain significantly higher than those secured in previous years. In addition, any resurgence in inflation or renewed global instability could delay further rate cuts by major central banks. Such developments may prolong the higher interest rate environment, placing additional pressure on REITs with weaker balance sheets or thinner interest coverage ratios. In these cases, the ability to sustain or grow distributions may remain constrained. 2. Sector-Specific Structural Challenges Investors should also recognise that not all REIT segments share the same outlook. Treating S-REITs as a single homogeneous asset class may overlook important differences in sector dynamics. Office REITs, for example, continue to face uncertainty as hybrid work arrangements reshape long-term office demand. In some markets, slower leasing activity and rising vacancy levels may weigh on rental growth. Hospitality REITs remain closely tied to tourism cycles and global travel patterns, making them more sensitive to economic slowdowns and fluctuations in visitor arrivals. Retail REITs operating in weaker locations may also face structural challenges from the continued rise of e-commerce and evolving consumer habits, which could affect tenant demand and rental growth. As a result, performance divergence across S-REIT sub-sectors may widen in 2026, reinforcing the importance of careful selection when constructing a REIT portfolio. 3. Limited Short-Term Capital Upside While income prospects for S-REITs are stabilising, capital appreciation may remain more moderate in the near term. Property valuations continue to be sensitive to interest rates and discount rates, meaning that changes in the broader monetary environment could still influence asset values. At the same time, REIT unit prices may experience volatility alongside wider equity markets, particularly during periods of heightened macroeconomic uncertainty. In addition, growth through acquisitions may become more measured. With borrowing costs still relatively elevated, many REIT managers are likely to adopt a more disciplined approach to capital allocation, focusing on balance sheet stability rather than aggressive expansion. As a result, S-REITs in 2026 may be more attractive as a source of stable income rather than a vehicle for rapid capital appreciation. 4. Currency and Overseas Exposure Risks Many S-REITs also hold overseas assets in markets such as the United States, Europe and Australia. While geographic diversification can enhance growth opportunities, it also introduces additional risks. Currency fluctuations may affect earnings and distributions when overseas income is translated back into Singapore dollars. In addition, REITs with international portfolios must navigate varying regulatory environments, economic conditions and property cycles across different regions. These factors can introduce an additional layer of complexity and potential volatility. REITs that do not actively hedge their currency exposure may experience greater fluctuations in earnings and distributions. What Investors Should Focus on in 2026 Given both the opportunities and risks within the sector, investors may benefit from focusing more closely on underlying fundamentals rather than simply chasing headline yields. In particular, balance sheet strength remains a critical consideration. Metrics such as gearing levels and interest coverage ratios can provide insight into a REIT’s financial resilience. Investors may also want to examine debt maturity profiles and refinancing schedules to understand potential exposure to future interest rate movements. Beyond financial metrics, the quality of underlying assets and their strategic locations play an important role in long-term performance. REITs supported by strong sponsors and experienced management teams may also demonstrate greater ability to navigate changing market conditions. Finally, factors such as lease expiry profiles and rental reversion trends can offer important clues about future income stability. In a normalising market environment, quality and financial discipline may matter more than simply pursuing the highest dividend yield. Conclusion: A Year for Selective Optimism Singapore REITs in 2026 present a balanced risk-reward profile. The sharp interest-rate shock of previous years appears to have eased, and income visibility is improving. However, structural shifts in certain sectors, refinancing risks, and global uncertainties mean investors must remain selective. For those seeking steady income with moderate risk — and who are prepared to focus on high-quality REITs with strong balance sheets — S-REITs can continue to play a meaningful role in a diversified portfolio in 2026. Contributors: Bryan Tan Senior Financial Services Manager (SGX REITs ambassador) Phillip Securities Pte Ltd (A member of PhillipCapital) http://bit.ly/BryanTanKW Shanon Tang Investment Specialist Phillip Securities Pte Ltd (A member of PhillipCapital) tinyurl.com/TTPshanontang 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.

    SIA Engineering Posts Strong Q3 Results on Associate Earnings Growth

    Published on Mar 6, 2026 213 

    Company Overview SIA Engineering Co. Ltd (SIAEC) is a leading aircraft maintenance, repair, and overhaul (MRO) services provider operating across multiple segments including engine and component services, and airframe and line maintenance. The company serves as a key maintenance partner for Singapore Airlines, which accounts for approximately 70% of its revenue, while also expanding its regional presence through subsidiaries and joint ventures. Strong Financial Performance Fuelled by Associates and Joint Ventures SIAEC reported impressive third-quarter results for the nine-month period ending 9M26, with profit after tax and minority interests (PATMI) rising 17.0% year-on-year to S$125.2 million, representing 70% of full-year estimates. The third quarter alone saw PATMI increase 9.7% to S$41.9 million, forming 23% of annual projections. This robust performance was primarily driven by exceptional growth in associate and joint venture contributions. Key Positive Drivers The standout performer was the share of profits from associates and joint ventures, which surged 21.3% year-on-year to S$110.1 million for the nine-month period. The Engine and Component segment led this growth, contributing S$6.2 million of the S$6.6 million gain in the third quarter, with the Airframe and Line Maintenance segment adding the remaining S$0.4 million. Operational momentum was supported by increased activity from Scoot, Singapore Airlines' budget subsidiary, which recorded double-digit year-on-year growth in passenger numbers and revenue passenger-kilometres from October 2025 through January 2026. Scoot's network expansion to destinations including Da Nang, Kota Bharu, and Chiang Rai has increased aircraft utilisation, resulting in higher maintenance service requirements. This translated into a 36.7% increase in light check volumes to 162 checks during the third quarter. SIAEC maintains a robust financial position with a net cash balance of approximately S$490 million, even after distributing an interim dividend of 2.5 cents per share in November 2025. The company's low gearing ratio of around 5% provides flexibility for future investments and regional expansion initiatives. Operating Cost Pressures However, the company faced headwinds from rising operational expenses, which increased 19.1% year-on-year to S$1.063 billion for the nine-month period. This acceleration from the 10.3% increase recorded in 9M25 was attributed to IT system implementation costs and gestation losses from new subsidiaries, which pressured operating margins. Investment Recommendation and Outlook Phillip Securities Research maintains an ACCUMULATE rating with an unchanged target price of S$4.14. Future growth catalysts include Base Maintenance Malaysia's, a wholly-owned subsidiary of SIA Engineering Company, second hangar, expected to become operational in the second half of 2027, and a potential joint venture with Safran for LEAP engine MRO services based in Singapore. Frequently Asked Questions Q: What drove SIAEC's strong third-quarter performance? A: The performance was primarily driven by stronger associate and joint venture income, with share of profits rising 21.3% year-on-year to S$110.1 million for the nine-month period. Q: Which business segment contributed most to the growth? A: The Engine and Component segment led the increase, contributing S$6.2 million of the S$6.6 million gain in associate and joint venture profits during the third quarter. Q: What is SIAEC's current financial position? A: SIAEC maintains a robust balance sheet with a net cash position of approximately S$490 million and low gearing of around 5%, providing financial flexibility for expansion. Q: What factors contributed to rising operating costs? A: Operating expenses increased due to IT system implementation costs, gestation losses from new subsidiaries, and volume growth, with group expenditure rising 19.1% year-on-year. Q: What are the key growth drivers for SIAEC going forward? A: Future growth drivers include Base Maintenance Malaysia's second hangar expected in 2H27 and a potential joint venture with Safran for LEAP engine MRO services in Singapore. Q: What is Phillip Securities Research's recommendation? A: Phillip Securities Research maintains an ACCUMULATE rating with an unchanged target price of S$4.14. Q: How did Scoot's expansion impact SIAEC's business? A: Scoot's network expansion and double-digit growth in passengers led to increased aircraft utilisation, resulting in higher maintenance service needs and a 36.7% increase in light check volumes to 162 checks. Q: What percentage of annual estimates do the nine-month results represent? A: The nine-month PATMI of S$125.2 million represents 70% of full-year estimates, indicating the company is well-positioned to meet annual projections. 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.

    Raffles Medical Group Faces Sluggish Growth on Mixed Results

    Published on Mar 6, 2026 112 

    Company Overview Raffles Medical Group Ltd operates as a healthcare provider with operations spanning Singapore and China. The company operates through multiple segments including healthcare services, hospital services, and investment holdings, positioning itself as a comprehensive medical services provider in the Asia-Pacific region. Financial Performance and Results The company delivered FY25 results that were broadly in line with expectations, with revenue and profit after tax and minority interests (PATMI) reaching 96% and 97% of estimates respectively. The second half of FY25 showed adjusted PATMI growth of 4% year-on-year to S$36.4 million. Shareholders benefited from a 20% increase in FY25 dividends to 3 cents, representing an 84% payout ratio. Positive Developments in Hospital Services Hospital services emerged as a bright spot, registering robust 9% growth in both revenue and profits during 2H25. This performance was driven by multiple factors including higher pricing, enhanced specialist offerings, increased patient channelling from insurance providers, and contributions from corporate accounts. The segment's profit before tax reached S$23.4 million, demonstrating the effectiveness of the company's pricing strategies and service expansion initiatives. China Operations Present Challenges The company's Chinese operations faced significant headwinds, with revenue weakness accelerating to a 6.7% year-on-year decline in 2H25, compared to a more modest 1.9% decline in 1H25. The challenges stem from difficulties in attracting experienced specialists, who typically prefer government hospitals that offer teaching and research opportunities. Whilst Raffles is collaborating with government teaching hospitals to enable specialists to practice several times weekly, the required scale and regularity remain insufficient. Outlook and Investment Recommendation Phillip Securities Research maintains a NEUTRAL recommendation with an unchanged target price of S$1.02 based on DCF valuation. The outlook reflects expectations of lacklustre growth driven by soft patient volumes, reduced foreign patient numbers, competition from new public hospitals, and ongoing price pressure from insurers. China's losses are expected to narrow gradually, though the lack of revenue momentum makes achieving break-even targets more challenging. The company maintains strong financial fundamentals with a net cash balance sheet of S$261 million and robust free cash flows of S$105 million in FY25. Frequently Asked Questions Q: What were Raffles Medical's key financial results for FY25? A: FY25 revenue and PATMI were within expectations at 96% and 97% of estimates respectively. Second half adjusted PATMI grew 4% year-on-year to S$36.4 million, and dividends increased 20% to 3 cents with an 84% payout ratio. Q: Which business segment performed best in 2H25? A: Hospital services was the standout performer, registering 9% growth in both revenue and profits in 2H25, reaching S$23.4 million in profit before tax. Q: What drove the strong performance in hospital services? A: The growth was driven by higher prices, new specialist offerings, insurance companies channelling more patients to Raffles, and contributions from corporate accounts. Q: How are Raffles Medical's China operations performing? A: China operations faced challenges with revenue declining 6.7% year-on-year in 2H25, accelerating from a 1.9% decline in 1H25. The company struggles to attract experienced specialists who prefer government hospitals. Q: What is Phillip Securities Research's investment recommendation? A: Phillip Securities Research maintains a NEUTRAL recommendation with an unchanged target price of S$1.02 based on DCF valuation. Q: What are the main challenges facing Raffles Medical going forward? A: Key challenges include soft patient volumes due to reduced foreign patients, new public hospitals, price pressure from insurers, and ongoing losses in China operations. Q: What are Raffles Medical's financial strengths? A: The company maintains a strong net cash balance sheet of S$261 million and generated robust free cash flows of S$105 million in FY25, whilst effectively controlling expenses, particularly staff costs. Q: What is the expected outlook for growth? A: The company is expected to deliver lacklustre growth due to muted volumes in Singapore and ongoing challenges in China, though China losses are expected to narrow gradually. 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.

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