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.  

 

Related Terms

Most Popular 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

Forex Trading

Option Trading

CFDs

Buying Unit Trusts

Treasury Bonds

Robo Advisor

Online Investing

Tools/Educational Resources

Sti components

Indices

Bond screener

Market Watch

Morning Note

Thematic portfolio

Economic Calender

Market Journal

Money Talk

Market Call

Stock Research

Fund screener

Etf screener

Investment Seminars

FAQs

Markets Offered by POEMS

SGX

PSE

ASX

KRX

SET

BIST

HNX

HOSE

NYSE

HKX

IDX

LSE

TWSE

FWB

TSE

NYSE

NASDAQ

US Asian Hours

BURSA

China A Shares

China B Shares

Euronext Paris

Euronext Lisbon

Euronext Amsterdam

    Read the Latest Market Journal

    Thomson Medical Group Ltd: Mixed Performance Amid Strategic Transformation

    Published on Feb 25, 2026 10 

    Company Overview Thomson Medical Group Ltd is a healthcare provider operating across Singapore, Malaysia, and Vietnam, focusing on medical services including inpatient and outpatient care, with expanding specialties in oncology, orthopaedics, spinal care, and emergency services. Financial Performance Below Expectations Thomson Medical Group's first-half results for FY26 presented a mixed picture, with revenue meeting expectations at 49% of full-year forecasts but profitability falling short. The company reported a narrowed net loss of S$10.2 million, representing a 21% improvement due to reduced interest expenses. However, EBITDA performance disappointed at only 38% of annual projections, prompting analysts to lower full-year EBITDA estimates by 17% to S$84 million. The Positive: Malaysia's Remarkable Turnaround The standout performance came from Malaysia operations, which delivered a dramatic transformation. Revenue surged 29% year-on-year to S$64 million, driven by substantial increases in average bill sizes for both inpatients (+18%) and outpatients (+57%). EBITDA experienced an impressive 73% year-on-year spike to S$11.5 million, whilst profit after tax and minority interest jumped five-fold to RM10.9 million. This turnaround was attributed to operating leverage benefits, with staff costs remaining stable despite revenue growth. The arrival of Oncocare services and increased medical tourism were key drivers of this exceptional performance. The Negative: Singapore Faces Cost Pressures In contrast, Singapore operations struggled with cost management challenges. Revenue remained flat during the first half, with bed occupancy rates at 50%. EBITDA margins contracted due to elevated operating and staff costs, despite a 22.6% year-on-year increase in average inpatient bill sizes. The introduction of more complex specialty cases, including orthopaedics, oncology, spinal, and emergency care services, contributed to higher revenue per patient but was offset by increased operational expenses. Revised Outlook and Recommendation Phillip Securities Research has downgraded its recommendation from BUY to ACCUMULATE, reflecting the mixed operational performance. The target price has been reduced to S$0.071 from the previous S$0.074, incorporating lower earnings projections. A net loss of S$18.9 million is expected for FY26, with raised depreciation estimates contributing to the revised outlook. The development of the Johor land bank remains pending, subject to review of multiple proposals. Whilst the turnaround strategy shows promise with increasing case complexity and revenue intensity, additional upfront costs and investments have impacted near-term profitability. Frequently Asked Questions Q: What were the key highlights of Thomson Medical Group's first-half results? A: Revenue met expectations at 49% of full-year forecasts, but EBITDA disappointed at 38% of projections. Net loss narrowed by 21% to S$10.2 million due to lower interest expenses. Q: How did Malaysia operations perform compared to Singapore? A: Malaysia delivered exceptional results with 29% revenue growth and 73% EBITDA increase, whilst Singapore revenue remained flat with declining EBITDA margins due to higher costs. Q: What drove the improvement in Malaysia's performance? A: The turnaround was driven by Oncocare's arrival, increased medical tourism, and significant jumps in average bill sizes for inpatients (+18%) and outpatients (+57%). Q: Why did Singapore operations struggle despite higher bill sizes? A: Although average inpatient bill sizes increased 22.6% due to more specialty cases, this was offset by higher operating and staff costs, resulting in margin compression. Q: What is Phillip Securities Research's current recommendation? A: The recommendation has been downgraded from BUY to ACCUMULATE, with a reduced target price of S$0.071 (previously S$0.074). Q: What are the key factors affecting the company's outlook? A: The outlook is influenced by ongoing turnaround efforts in Singapore and Malaysia, pending Johor land bank development, and the impact of upfront investments on near-term profitability. Q: How has the company's financial guidance changed? A: FY26 EBITDA estimates were lowered by 17% to S$84 million, with an expected net loss of S$18.9 million due to higher depreciation estimates. 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.

    Airbnb Inc Upgraded to Accumulate as New US Initiatives Drive Booking Growth

    Published on Feb 25, 2026 8 

    Company Overview Airbnb Inc operates as a global online marketplace for short-term accommodation rentals, connecting hosts with guests seeking alternative lodging options across diverse markets worldwide. Financial Performance and Outlook Airbnb delivered mixed results for FY25, with revenue meeting expectations at 102% of forecast whilst profit after tax and minority interests (PATMI) fell slightly short at 96%. Fourth quarter revenue expanded 12% year-on-year to US$2.8 billion, primarily driven by a robust 10% increase in booking volumes. However, PATMI declined 26% year-on-year due to increased investment in new growth and policy initiatives. Looking ahead, management expects first quarter FY26 revenue to grow 14-16% year-on-year to US$2.59-2.63 billion, supported by modest average daily rate growth, high single-digit booking volume gains, and favourable foreign exchange tailwinds. The company anticipates higher booking volumes in FY26 driven by major sporting events, including the Winter Olympics this quarter and the 2026 FIFA World Cup across 16 North American cities from June to July. Key Positives Driving Growth The company demonstrated strong momentum in booking activity, with nights and seats booked reaching 121.9 million, representing a 10% year-on-year increase. This growth was particularly robust in the US market, supported by stronger adoption of new customer-friendly initiatives including Reserve Now, Pay Later (eliminating upfront payments), simplified fee structures for enhanced price transparency, and updated cancellation policies. These initiatives are set to expand to global guests and cross-border states within the US in coming months. Average daily rates strengthened considerably, expanding 6% year-on-year to US$167.5 in the fourth quarter, a three-point improvement. This increase was attributed to longer booking lead times, faster growth in higher-priced short-term stays compared to extended 28-plus day stays, and increased bookings for larger homes with four or more bedrooms. Global expansion continues to show promise, with nights booked in new markets increasing at twice the rate of core markets. Latin America and Asia Pacific regions experienced mid-to-high teen growth in nights booked, with average daily rates boosted by price appreciation and currency effects. Brazil, Japan, and India emerged as the fastest-growing countries, recording nights booked growth of 50% year-on-year. Research Recommendation Phillip Securities Research has upgraded Airbnb to Accumulate from Neutral, citing recent share price performance. The target price has been raised to US$138 from the previous US$127 using a discounted cash flow model rolled forward to FY26, whilst maintaining unchanged assumptions with a weighted average cost of capital of 7% and terminal growth rate of 3.5%. Frequently Asked Questions Q: What was Airbnb's revenue performance in the fourth quarter? A: Airbnb's fourth quarter revenue grew 12% year-on-year to US$2.8 billion, driven by a 10% increase in booking volumes to 121.9 million. Q: Why did PATMI decline despite revenue growth? A: PATMI declined 26% year-on-year due to higher investment in new growth and policy initiatives, despite the revenue increase. Q: What new initiatives is Airbnb implementing in the US? A: Airbnb is implementing Reserve Now, Pay Later (zero upfront payment), simplified fee structures for greater price transparency, and updated cancellation policies, with plans to expand these globally. Q: What is driving the increase in average daily rates? A: The 6% year-on-year increase in ADR to US$167.5 is driven by longer booking lead times, faster growth in higher-priced short-term stays versus extended stays, and more bookings for larger homes with four or more bedrooms. Q: Which regions and countries are showing the strongest growth? A: Latin America and Asia Pacific regions are experiencing mid-to-high teen growth, with Brazil, Japan, and India being the fastest-growing countries with nights booked up 50% year-on-year. Q: What is Phillip Securities' new recommendation and target price? A: Phillip Securities upgraded Airbnb to Accumulate from Neutral with a raised target price of US$138, up from the previous US$127. Q: What major events may drive FY26 booking volumes? A: Higher booking volumes in FY26 may be driven by the Winter Olympics this quarter and the 2026 FIFA World Cup across 16 North American cities from June to July. Q: What is the expected revenue guidance for first quarter FY26? A: Management expects first quarter FY26 revenue to grow 14-16% year-on-year to US$2.59-2.63 billion, supported by modest ADR growth, high single-digit booking volume gains, and FX tailwinds. 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.

    AppLovin Corp Maintains Strong Growth Trajectory Despite Market Challenges

    Published on Feb 25, 2026 9 

    Company Overview AppLovin Corp operates as a leading mobile technology platform, primarily focused on mobile gaming advertising and monetisation solutions. The company's core business revolves around its AXON advertising platform, which serves both mobile gaming developers and increasingly, e-commerce advertisers, through advanced machine learning algorithms and targeted advertising capabilities. Strong Financial Performance Drives Upgrade Phillip Securities Research has upgraded AppLovin Corp to BUY from ACCUMULATE, setting a target price of US$600. This upgrade comes despite lowering the previous target price, reflecting both the company's strong operational performance and a more cautious market environment. The research house increased its weighted average cost of capital to 6.5% from 6.0% to account for current market volatility. The fourth quarter of 2025 demonstrated AppLovin's resilience, with revenue climbing 66% year-on-year to US$1.66 billion, though this fell slightly below expectations. More impressively, profit after tax and minority interests surged 84% year-on-year to US$1.1 billion, surpassing forecasts and highlighting the company's improving operational efficiency. Robust Gaming Advertising Foundation The company's advertising business continues to demonstrate exceptional strength, driven by technological improvements in its core mobile gaming segment and the expansion into e-commerce verticals. AXON's, their self-service AI-powered advertising platform, unique approach of delivering full-screen video advertisements during natural game breaks sets it apart from competitors. This format ensures complete viewability and captures users' full attention, resulting in an average watch time exceeding 35 seconds—significantly longer than the 30 seconds typical for television and 7 seconds for social media platforms. The platform's superior monetisation efficiency enables advertisers to achieve break-even on acquisition costs within 30 days, considerably faster than the approximately three months required on other major advertising platforms. This efficiency has driven annual advertiser spending on the platform to exceed US$11 billion. Strong Profitability Growth AppLovin's profitability metrics showed remarkable improvement in the fourth quarter, with net income rising 84% year-on-year to US$1.1 billion. The company achieved a 16% margin improvement, with margins expanding from 61% to 77%, supported by enhanced operating leverage and a 55% year-on-year reduction in expenses. Free cash flow increased 88% year-on-year to US$1.31 billion, whilst the company maintains a healthy cash balance of US$3.95 billion, representing 91% year-on-year growth. The company retains approximately US$3.28 billion in remaining share repurchase authorisation. Frequently Asked Questions Q: What is Phillip Securities Research's current recommendation and target price for AppLovin Corp? A: Phillip Securities Research has upgraded AppLovin Corp to BUY from ACCUMULATE with a target price of US$600. Q: How did AppLovin's fourth quarter 2025 financial performance compare to expectations? A: Revenue of US$1.66 billion was below expectations but grew 66% year-on-year, whilst profit after tax and minority interests of US$1.1 billion surpassed forecasts, rising 84% year-on-year. Q: What makes AppLovin's advertising platform unique compared to competitors? A: AXON delivers full-screen video advertisements during natural game breaks, ensuring complete viewability with average watch times exceeding 35 seconds, compared to 30 seconds for TV and 7 seconds for social media platforms. Q: How quickly can advertisers achieve break-even on AppLovin's platform? A: The platform's monetisation efficiency enables advertisers to break even on acquisition costs within 30 days, significantly faster than the roughly three months required on other major advertising platforms. Q: What drove the strong profitability growth in the fourth quarter? A: Net income growth of 84% year-on-year was driven by robust revenue growth, improved operating leverage, a 55% reduction in expenses, and margin expansion from 61% to 77%. Q: What is the company's current financial position? A: AppLovin maintains a healthy cash balance of US$3.95 billion, up 91% year-on-year, with free cash flow of US$1.31 billion and remaining share repurchase authorisation of approximately US$3.28 billion. Q: Why did Phillip Securities Research lower its revenue forecast despite the upgrade? A: The research house lowered revenue forecasts by 15% as e-commerce revenue is expected to take time to materialise, given the segment remains in early stages and is focusing on scaling. Q: What factors are expected to support future growth? A: Growth is expected to be supported by expansion into the e-commerce vertical, AXON, and continued strong performance in the gaming segment. 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.

    BRC Asia Ltd Delivers Strong Growth with Record Order Book Surge

    Published on Feb 25, 2026 7 

    Company Overview BRC Asia Ltd is a Singapore-based construction company that specialises in providing building and infrastructure solutions. The company operates in the construction sector, serving various segments including residential housing, airport infrastructure, and healthcare projects. Strong Financial Performance Drives Growth BRC Asia reported impressive first-quarter 2026 results, with revenue surging 27% year-on-year to S$444 million, marking the highest revenue growth since the third quarter of 2022. This substantial increase was primarily driven by an estimated 42% year-on-year rise in delivery volumes, reflecting stronger project offtake across the company's portfolio. The company's profit after tax and minority interests (PATMI) jumped 30% year-on-year to S$27.3 million, demonstrating robust operational performance. Net margins expanded to 6.1%, up from 5.6% in the previous year, whilst gross margins reached 10.5%, representing a significant improvement of 2% year-on-year. Record Order Book Provides Future Growth Visibility The standout achievement for BRC Asia was its order book performance, which spiked 47% year-on-year to reach a record S$2.2 billion in the first quarter of 2026. This substantial increase was underpinned by successful contract wins across multiple sectors, including HDB Build-To-Order (BTO) contracts, the prestigious Changi Airport Terminal 5 project, and various healthcare initiatives. The company's S$570 million Changi Airport Terminal 5 contract represents a significant component of the order book and is expected to progress substantially over the coming period. Most of the current order book is anticipated to be completed within the next two years, providing strong revenue visibility. Favourable Market Outlook The construction landscape in Singapore appears increasingly supportive, with the Building and Construction Authority projecting total construction demand of S$47-53 billion in 2026. This represents a substantial 61% increase above the 20-year historical average, indicating a robust pipeline of opportunities. Research Recommendation and Outlook Phillip Securities Research maintains a BUY recommendation on BRC Asia, raising the target price to S$5.30 from the previous S$5.10. The analysts increased their FY26 revenue and PATMI forecasts by 16% each, reflecting confidence in stronger project offtake driven by the record order book. The stock offers an attractive FY26 dividend yield of 5.3%, making it appealing for income-focused investors. Frequently Asked Questions Q: What was BRC Asia's revenue growth in 1Q26? A: BRC Asia's revenue surged 27% year-on-year to S$444 million in 1Q26, representing the highest revenue growth since 3Q22. Q: What drove the strong revenue performance? A: Revenue growth was driven by an estimated 42% year-on-year increase in delivery volumes due to stronger project offtake across the company's portfolio. Q: What is Phillip Securities Research's recommendation and target price? A: Phillip Securities Research maintains a BUY recommendation with a raised target price of S$5.30, up from the previous S$5.10. Q: How did profitability perform in 1Q26? A: PATMI jumped 30% year-on-year to S$27.3 million, with net margins improving to 6.1% from 5.6% in the previous year. Q: What is the outlook for Singapore's construction market? A: The Building and Construction Authority projects total construction demand in Singapore to be S$47-53 billion in 2026, which is 61% higher than the 20-year historical average. Q: What is the expected dividend yield? A: BRC Asia trades at an attractive FY26 dividend yield of 5.3%, making it appealing for income-focused investors. Q: What are the key projects in BRC Asia's order book? A: Major projects include HDB BTO contracts, the S$570 million Changi Airport Terminal 5 contract, and various healthcare projects, with most expected to be completed within two years. 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.

    CapitaLand Investment Faces China Valuation Challenges Despite Resilient Fee Growth

    Published on Feb 25, 2026 7 

    Company Overview CapitaLand Investment Limited (CLI) is a leading real estate investment manager operating across multiple asset classes and geographical markets. The company focuses on an asset-light strategy, generating recurring fee income through fund management services across listed and private funds, alongside lodging and commercial management. Mixed Financial Performance Amid China Headwinds CLI reported FY25 PATMI of S$145 million, representing a steep 70% year-on-year decline that fell significantly short of expectations, forming only 22% of our FY25 forecast. This disappointing headline figure was primarily driven by substantial S$439 million revaluation losses, predominantly from Chinese assets. However, when excluding these revaluation impacts, operating PATMI of S$539 million performed more respectably at 98% of estimates, with a 6% year-on-year increase supported by higher contributions from listed funds, reduced finance costs, and lower operating expenses. The company's Funds Under Management expanded 7% year-on-year to S$125 billion. Management believes organic growth can drive FUM to approximately S$160 billion, though acquisitions will be necessary to achieve the ambitious S$200 billion target by 2028. Strong Positives in Fee Income Growth CLI demonstrated resilience in its core fee-generating businesses, with fee income delivering steady 6% year-on-year growth. All fee-related business segments recorded revenue increases, with listed funds management up 8% and private funds management surging 24%, including CLI's 40% share of SCCP revenue. The lodging management division achieved a record year, signing 19,000 units across 102 properties, which positions the company well for long-term growth as these units become operational. CLI now manages 176,000 keys, with over 100,000 currently operational. Significant Valuation Pressures The major negative factor was the sharp decline in asset valuations, with S$436 million in aggregate fair value losses recorded. China bore the brunt of these losses at S$545 million, particularly affecting office and business park assets, as challenging operating conditions persist with negative rental reversions across all sectors. The UK and Europe also contributed S$62 million in losses, though these were partially offset by gains in Southeast Asia (S$59 million) and India (S$98 million). Divestment activity slowed considerably, falling from S$5.5 billion in FY24 to S$3.1 billion in FY25, largely due to the higher proportion of remaining assets located in China. Approximately S$1 billion was divested from China at 10-20% discounts to book value, leaving roughly S$3 billion of Chinese assets still on the books. Investment Outlook Phillip Securities Research maintains a BUY recommendation with a higher sum-of-the-parts target price of S$3.69, up from the previous S$3.65. The firm expects balance sheet divestments to accelerate in FY26, with potential for a second C-REIT listing. The board has proposed a final dividend of 12 cents, implying a 3.8% yield. Frequently Asked Questions Q: What caused CapitaLand Investment's significant earnings decline in FY25? A: The 70% year-on-year PATMI decline was primarily due to S$439 million in revaluation losses, mainly from China assets. Excluding these losses, operating PATMI actually grew 6% year-on-year. Q: How did CLI's fee income business perform? A: Fee income showed resilience with 6% year-on-year growth. Listed funds management grew 8%, private funds management surged 24%, and lodging management signed a record 19,000 units across 102 properties. Q: What is CLI's Funds Under Management target? A: FUM currently stands at S$125 billion, up 7% year-on-year. CLI believes it can grow organically to approximately S$160 billion but acknowledges acquisitions will be necessary to reach the S$200 billion target by 2028. Q: Which geographical markets are causing valuation concerns? A: China recorded the largest losses at S$545 million, particularly in office and business parks. The UK and Europe also saw S$62 million in losses, though Southeast Asia and India posted gains of S$59 million and S$98 million respectively. Q: How much Chinese assets does CLI still hold? A: After divesting approximately S$1 billion from China at 10-20% discounts to book value, CLI still has roughly S$3 billion of Chinese assets remaining on its books. Q: What is Phillip Securities Research's recommendation? A: Phillip Securities Research maintains a BUY recommendation with a target price of S$3.69, citing CLI's robust recurring fee income and asset-light strategy that supports resilience amid macro uncertainty. Q: What dividend has been proposed for FY25? A: CLI’s board has proposed a final dividend of 12 cents, which implies a dividend yield of 3.8%. 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.

    Magnificent 7 Stocks Show Resilient Performance Amid Mixed Market Conditions

    Published on Feb 25, 2026 6 

    Market Performance Overview The Magnificent 7 technology stocks demonstrated modest resilience in January 2026, rising 1.3% despite facing headwinds from investor rotation away from mega-cap technology shares. While slightly underperforming the S&P 500's 1.4% gain, the group outpaced the NASDAQ, which remained flat during the period. This performance occurred as investors shifted capital towards small-cap, value, and cyclical sectors, driven by profit-taking activities and concerns about elevated technology valuations. Strong Earnings Drive Growth Momentum The Magnificent 7 companies (excluding NVIDIA) delivered impressive fourth-quarter 2025 results that broadly exceeded market expectations. The group achieved their highest revenue growth in four years, posting a robust 15% year-over-year increase, whilst earnings growth accelerated to 23% year-over-year. This strong performance was underpinned by sustained cloud momentum, enhanced advertising efficiency, and resilient hardware demand across the technology sector. Individual Stock Performance Highlights Tesla emerged as the standout performer, surging 10.9% after delivering earnings that beat analyst estimates. The company's management demonstrated strong commitment to autonomous vehicles and robotics, announcing plans for over US$20 billion in capital expenditure to construct new facilities for Optimus robot production and Cybercab/Robotaxi manufacturing in fiscal year 2026. Meta followed closely with a 10.6% gain, benefitting from robust AI-driven fourth-quarter 2025 results that showcased the company's successful monetisation of artificial intelligence across its Family of Apps platform. This performance reflected growing investor confidence in Meta's AI capabilities. Conversely, Microsoft faced significant pressure, declining 9.1% as the largest laggard. The company's higher-than-expected capital expenditure of US$37.5 billion, representing a 66% year-over-year increase compared to the anticipated US$34.3 billion, raised concerns about near-term profitability. Apple also struggled, falling 4.9% due to rising memory costs creating margin headwinds and the lack of visible results from its Gemini partnership. Investment Outlook Phillip Securities Research maintains an overweight recommendation on the Magnificent 7 stocks. The research firm believes earnings growth will continue to outperform both the S&P 500 and NASDAQ 100, excluding Tesla. Key growth drivers include increasing AI demand from sovereign nations, the US government's AI Action Plan, and anticipated rate cuts in 2026. Frequently Asked Questions Q: What was the overall performance of Magnificent 7 stocks in January 2026? A: The Magnificent 7 stocks rose 1.3% in January 2026, slightly underperforming the S&P 500 (1.4%) but outperforming the NASDAQ (flat). Q: Which factors drove the strong fourth-quarter 2025 earnings performance? A: The strong performance was driven by robust cloud momentum, strong advertising efficiency, and resilient hardware demand, resulting in 15% year-over-year revenue growth and 23% year-over-year earnings growth. Q: Which Magnificent 7 stocks were the top performers in January 2026? A: Tesla was the biggest gainer at 10.9% following earnings beats and autonomous vehicle commitments, whilst Meta gained 10.6% due to successful AI monetisation across its platforms. Q: What caused Microsoft's significant decline during the period? A: Microsoft fell 9.1% due to higher-than-expected capital expenditure of $37.5 billion (versus $34.3 billion expected), representing a 66% year-over-year increase and raising concerns about near-term profitability. Q: What is Phillip Securities Research's recommendation for the Magnificent 7 stocks? A: Phillip Securities Research maintains an overweight recommendation on the Magnificent 7 stocks, expecting continued earnings outperformance versus broader market indices. Q: What are the key growth drivers supporting the investment outlook? A: Key tailwinds include greater AI demand from sovereign nations, the US government's AI Action Plan unveiled in July 2025, and anticipated rate cuts expected in 2026. Q: What major capital investment plans did Tesla announce? A: Tesla announced plans for over $20 billion in capital expenditure to build new factories for Optimus robot production and Cybercab/Robotaxi production in fiscal year 2026. 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.

    Palantir Technologies Delivers Strong Commercial Growth Amid AI Adoption Surge

    Published on Feb 25, 2026 5 

    Company Overview Palantir Technologies Inc operates as a leading data analytics and artificial intelligence platform provider, serving both commercial enterprises and government agencies. The company's core business centres on its Ontology platform and Artificial Intelligence Platform (AIP) tools, which enable organisations to harness data for decision-making and operational efficiency across defence, healthcare, finance, and other industries. Financial Performance Exceeds Expectations Palantir's FY25 results demonstrated robust performance, with group revenue and profit after tax and minority interests (PATMI) surpassing forecasts at 106% and 121% respectively. This outperformance was driven by stronger-than-expected momentum in the US commercial segment and continued strength in government contract execution and new awards. Looking ahead, the company projects impressive growth for 1Q26e, with group revenue expected to increase 74% year-on-year to US$1.53 billion. Adjusted operating income is forecast to rise 123% year-on-year to US$872 million, reflecting significant operating leverage benefits. Commercial Segment Reaches New Heights The standout performance came from Palantir's commercial division, which achieved a new growth high with revenue increasing 82% year-on-year to US$677 million, representing a substantial acceleration from 31% growth in 4Q24. Commercial total contract value surged 161% year-on-year to US$2.6 billion in 4Q25, with half originating from the US market. The US commercial segment particularly excelled, with revenue up 137% year-on-year to US$507 million, a dramatic improvement from 63% growth in 4Q24. This highlights increasing demand for AI production applications among large US enterprises. The segment now accounts for 36% of total group revenue, up from 22% two years prior. Government Segment Maintains Strong Momentum Government revenue also performed well, growing 60% year-on-year to US$730 million, up from 41% in 4Q24. This growth was supported by continued execution in existing programmes and new contract awards from the Department of Defence and civil agencies. US government revenue rose 66% year-on-year to US$570 million, whilst international government revenue increased 43% year-on-year, driven primarily by UK operations. Notably, the US Navy awarded Palantir a US$448 million contract to modernise shipbuilding supply chains. Investment Recommendation Phillip Securities Research maintains a BUY recommendation with a target price of US$190, revised down from US$208. Despite the lower target price, reflecting normalised long-term growth expectations and increased competitive pressure from analytical AI providers, the firm remains positive on Palantir's prospects, citing the company's Ontology platform advantages and AIP tools driving enterprise AI adoption beyond defence into commercial industries. Frequently Asked Questions Q: What drove Palantir's strong FY25 performance? A: FY25 group revenue and PATMI exceeded expectations at 106% and 121% of forecasts respectively, driven by stronger-than-expected US commercial momentum and continued strength in US government contract execution and new awards. Q: How is the commercial segment performing? A: Commercial revenue achieved a new growth high, increasing 82% year-on-year to US$677 million, with commercial total contract value growing 161% year-on-year to US$2.6 billion in 4Q25. Q: What are Palantir's growth projections for 1Q26e? A: Palantir expects group revenue to grow 74% year-on-year to US$1.53 billion, with adjusted operating income projected to rise 123% year-on-year to US$872 million, driven by operating leverage. Q: How significant is the US commercial segment? A: US commercial revenue accelerated to 137% year-on-year growth, reaching US$507 million, and now accounts for 36% of group revenue, up from 22% two years ago. Q: What is driving government segment growth? A: Government revenue grew 60% year-on-year to US$730 million, supported by continued execution in existing programmes and new awards from the Department of Defence and civil agencies. Q: What is Phillip Securities Research's recommendation? A: The firm maintains a BUY recommendation with a target price of US$190, down from US$208, remaining positive on Palantir's Ontology platform advantages and AIP tools driving enterprise AI adoption. Q: What major contract did Palantir recently secure? A: The US Navy awarded Palantir a US$448 million contract to modernise the shipbuilding supply chain and accelerate the delivery of naval vessels. 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.

    Prime US REIT: Enhanced Payout Backed by Improving Portfolio Fundamentals

    Published on Feb 25, 2026 3 

    Company Overview Prime US REIT is a real estate investment trust focused on office properties across the United States. The REIT manages a diversified portfolio valued at US$1.4 billion, with properties strategically located in key American markets. Financial Performance and Distribution Policy Prime US REIT delivered distribution per unit (DPU) of 0.49 US cents for the second half of FY25 and 0.61 US cents for the full year, meeting expectations and representing 80% and 98% of forecasts respectively. The REIT has significantly enhanced its distribution policy by raising the payout ratio from just 10% in 1H25 to 50% in October 2025 and further to 65% in December 2025. Despite this improved distribution framework, FY25 revenue and net property income declined 5.4% and 8.8% year-on-year respectively, primarily attributed to the July 2024 divestment of One Town Centre and various lease expiries throughout the period. The Positive: Strengthening Portfolio Fundamentals The REIT demonstrated notable progress in its leasing activities and portfolio stability. Management secured 680,000 square feet of new leases during FY25, representing 16% of net lettable area, at an impressive rental reversion of +5.6%. This marked a substantial improvement from FY24's 592,000 square feet at +1.8% rental reversion, reflecting strengthening leasing momentum. Portfolio occupancy increased from 80.7% to 82.7% quarter-on-quarter, with management targeting at least 85% occupancy by end-2026. The weighted average lease expiry extended to 5.6 years from 4.4 years previously, significantly enhancing income visibility. Only 7.2% of leases by income require renewal in 2026, providing substantial cash flow certainty. Portfolio valuations rose 3.5% year-on-year to US$1.4 billion, with 11 of 13 assets posting gains driven by stronger contracted cash flows and 25-50 basis points of cap rate compression, indicating a turnaround in capital values. The Negative: Selective Property Challenges Two properties experienced valuation declines due to elevated cap and discount rates. 171 17th Street fell 6% following a comparable sale in May 2025 by a distressed seller. More significantly, Tower I at Emeryville recorded a sharp 48.7% decline after a nearby transaction in September 2025 completed at approximately 10% cap rate, which prompted valuers to increase both cap and discount rates by around 200 basis points for the asset. Investment Recommendation Phillip Securities Research maintains a BUY recommendation with a higher target price of US$0.32, increased from US$0.30 previously. The enhanced payout ratio is supported by improving committed occupancy and strong cash flow visibility, as new leases signed in FY24/25 are scheduled to commence cash contributions from 2026 onwards. Trading at 0.42x price-to-net asset value, Prime US REIT offers an attractive entry point with dividend growth potential as their portfolio stabilises. Frequently Asked Questions Q: What was Prime US REIT's distribution performance in FY25? A: Prime delivered DPU of 0.49 US cents for 2H25 and 0.61 US cents for FY25, representing 80% and 98% of forecasts respectively, supported by a significantly higher payout ratio. Q: How has the payout ratio changed recently? A: The payout ratio increased dramatically from 10% in 1H25 to 50% in October 2025 and further to 65% in December 2025, backed by improving cash flow visibility. Q: What drove the decline in revenue and net property income? A: FY25 revenue and net property income fell 5.4% and 8.8% year-on-year respectively, primarily due to the July 2024 divestment of One Town Centre and lease expiries during the year. Q: How did leasing performance improve in FY25? A: Prime secured 680,000 square feet of leases at +5.6% rental reversion, significantly improved from FY24's 592,000 square feet at +1.8%, demonstrating strengthening leasing momentum. Q: What is the occupancy outlook for the portfolio? A: Portfolio occupancy increased from 80.7% to 82.7% quarter-on-quarter, with management expecting to reach at least 85% by end-2026 through continued active leasing initiatives. Q: Which properties experienced valuation challenges? A: Two properties recorded declines: 171 17th Street fell 6% following a distressed comparable sale, whilst Tower I at Emeryville declined 48.7% after a nearby transaction prompted significant cap and discount rate increases. Q: What is Phillip Securities Research's investment recommendation? A: The firm maintains a BUY rating with a raised target price of US$0.32 (from US$0.30), citing the attractive 0.42x P/NAV valuation and dividend growth potential as the portfolio stabilises. Q: What provides confidence in the enhanced payout ratio sustainability? A: The higher payout ratio is supported by improving committed occupancy, strong cash flow visibility, and new leases signed in FY24/25 that will commence cash contributions from 2026 onwards. 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.

    Latest Videos

    Join Events & Seminars

    Learn best practices and latest market outlook from experts and special guests

    Hear & Ask our Experts

    Join live weekly market calls

    Read Popular News & Reports, Technical Pulses

    at www.stocksbnb.com

    Subscribe to our YouTube Channel

    New video every week

    Follow us

    Facebook Social Icon Instagram Icon Twitter Social Icon Youtube Social Icon

    IMPORTANT INFORMATION

    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  

     

    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com