Withholding Tax
Table of Contents
Withholding Tax
Withholding tax is a crucial concept in the realm of taxation that affects individuals, businesses, and cross-border transactions. It is essential to have a clear understanding of this term to ensure compliance and to make informed financial decisions. Withholding tax is vital for individuals and businesses to navigate the intricacies of taxation.
What is withholding tax?
Withholding tax, also known as retention tax, is an income tax levied on certain types of income at the time of payment, rather than at the end of the tax period. It is typically withheld by the payer and remitted to the tax authorities on behalf of the recipient. The purpose of withholding tax is to ensure the collection of tax revenue, improve tax compliance, and simplify the tax collection process. Withholding tax is an integral part of the tax systems. Understanding its application and implications is essential for taxpayers in these countries to ensure compliance with tax laws and meet their tax obligations.
Withholding tax serves as a mechanism for tax collection and compliance, benefiting both governments and taxpayers. Familiarity with withholding tax requirements is vital for individuals and businesses to ensure proper adherence to tax regulations and to avoid any potential complications. Compliance with withholding tax regulations helps taxpayers avoid penalties and legal consequences associated with non-compliance.
Understanding withholding tax
Withholding tax is designed to ensure that tax is paid on certain types of income, such as dividends, interest, royalties, and non-salary compensation. It applies to both residents and non-residents who earn income within a particular jurisdiction. The rate of withholding tax varies depending on the type of income and the tax laws of the country involved.
The purpose of withholding tax is multifold. Firstly, it ensures the timely collection of tax revenue by requiring the payer to deduct and remit the tax at the source of income. This helps governments in meeting their financial obligations and maintaining essential public services. Secondly, withholding tax enhances tax compliance by capturing tax revenue upfront and reducing the likelihood of tax evasion. It simplifies the tax collection process, as the onus of tax deduction and remittance falls on the payer.
Types of withholding tax
There are various types of withholding tax, each applying to different types of income. Some common examples include:
- Dividend withholding tax: Withheld on dividend payments to shareholders.
- Interest withholding tax: Withheld on interest earned on loans, bonds, or bank deposits.
- Royalty withholding tax: Withheld on royalty payments for the use of intellectual property.
- Non-salary compensation withholding tax: Withheld on payments made to independent contractors, freelancers, or self-employed individuals.
Navigating the complexities of withholding tax is crucial for taxpayers. By understanding the key features and implications of each type, taxpayers can ensure compliance and make informed decisions. It is important to consult tax professionals and refer to the specific tax regulations and treaty provisions to accurately determine the applicable rates and exemptions.
History of withholding tax
The concept of withholding tax has a rich historical background. Its origins can be traced back to ancient times when rulers imposed levies on various forms of income. In modern times, withholding tax gained prominence during the early 20th century as a means to ensure timely tax collection. The US was among the first countries to introduce withholding tax during World War II, as a temporary measure to finance the war effort.
The history of withholding tax highlights its evolution as a vital tool for efficient tax collection. Initially introduced as a temporary measure, withholding tax became a permanent feature of the tax systems. Its widespread adoption can be attributed to its effectiveness in ensuring timely tax payments, simplifying tax administration, and promoting tax compliance.
Over time, the scope of withholding tax expanded to include various types of income, such as dividends, interest, and non-salary compensation. The tax rates and regulations surrounding withholding tax were adjusted to reflect changes in tax policies and economic conditions. Understanding the history of withholding tax helps taxpayers comprehend its significance and appreciate its role in supporting government functions and maintaining a stable fiscal environment.
Calculation of withholding tax
The calculation of withholding tax involves understanding the applicable tax rates and the tax residency status of the recipient. Tax rates can vary based on the type of income, tax treaties, and local tax laws. The calculation involves multiplying the gross payment by the applicable tax rate and deducting the withholding tax amount from the payment. Employers and payers are responsible for deducting the appropriate amount of tax from payments made to employees or non-residents and remitting it to the tax authorities. It is important for taxpayers to understand the specific tax rules and consult with tax professionals to ensure accurate calculation and compliance with the respective country’s regulations.
Frequently Asked Questions
Common examples of withholding tax include dividends received from shares, interest earned on bank deposits, royalties from licensing intellectual property, and payments made to independent contractors.
The purpose of withholding tax is to ensure the timely collection of taxes on specific types of income. It aids in reducing tax evasion, ensuring tax compliance, and simplifying the tax collection process for governments.
The amount of tax withheld depends on various factors, such as the type and amount of income, tax residency status, and applicable tax rates. It is advisable to consult with tax professionals or refer to tax regulations for accurate calculations.
Certain individuals may qualify for exemption or a reduced rate of withholding tax based on tax treaties between countries, residency status, or specific criteria outlined in tax laws. It is essential to understand the specific requirements and apply for exemptions if eligible.
Withholding tax is also commonly referred to as retention tax or tax deducted at source. This alternative term emphasies the method by which the tax is collected, as it is deducted from the income at the source itself, before it reaches the recipient. The concept of tax deducted at source highlights the objective of ensuring the collection of tax revenue by withholding a portion of the income at the time of payment.
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Grab Holdings Achieves First Full Year of Net Profit with Strong Revenue Growth
Company Overview Grab Holdings, Southeast Asia's leading super-app platform, operates across mobility, deliveries, and financial services segments. The company has successfully transformed from a ride-hailing service into a comprehensive ecosystem-led monetisation model serving millions of users across the region. Mobility Segment Driving Margin Expansion Grab's mobility division continues to deliver impressive results, with revenue growing 15% year-on-year and gross merchandise value (GMV) expanding 20%. The company has strategically expanded demand capture beyond its core app through partnerships with travel platforms including Trip.com and AliPay, resulting in over 10-fold growth in traveller monthly transacting users over three years. High-value airport trips now represent more than 10% of Mobility GMV. Technology investments in AI dispatch and routing optimisation have enhanced marketplace productivity significantly. Driver earnings per online hour increased 29% whilst average trip fares decreased 16% from 2021-2025, as drivers complete more trips efficiently. This efficiency-led scaling has translated into meaningful operating leverage, with EBITDA margin expanding 20 basis points to 8.6%. GrabMart Fuelling Deliveries Growth GrabMart represents the next growth driver for Grab's deliveries segment, expanding 1.7 times faster than GrabFood. This acceleration stems from deeper integration with major supermarket chains, improved fresh-item fulfilment capabilities, and refined merchant selection strategies that encourage users to shift from small top-ups to larger weekly shopping baskets. The innovative GrabMore feature allows users to add groceries to food orders without additional delivery costs, strengthening cross-sell opportunities and usage frequency. GrabMart users increased 30% year-on-year in FY25, yet still represent only approximately 10% of Deliveries GMV, indicating substantial penetration potential as online grocery penetration in Southeast Asia remains in low single digits. Beyond growth, GrabMart provides margin accretion through larger basket sizes that improve cost absorption per trip and enhance fleet utilisation. Strong Financial Performance Drives Analyst Confidence Phillip Securities Research maintains its BUY recommendation for Grab Holdings with an unchanged DCF target price of US$7.00. The research house has rolled over valuations to FY26e and increased FY26e revenue and PATMI forecasts by 1% and 2% respectively, reflecting higher growth prospects and expanding margins across both on-demand and financial services divisions. The fourth quarter of FY25 demonstrated robust performance, with revenue growing 19% year-on-year to US$906 million. This growth was driven by strong performances across key segments, with On-Demand services advancing 17% and Financial Services surging 34% year-on-year. Notably, 4Q25 PATMI outperformed expectations due to operating leverage and higher-margin monetisation through fintech and advertising services. Frequently Asked Questions Q: What is Phillip Securities Research's recommendation and target price for Grab Holdings? A: Phillip Securities Research maintains a BUY recommendation with an unchanged DCF target price of US$7.00. Q: How did Grab perform in the fourth quarter of FY25? A: 4Q25 revenue grew 19% year-on-year to US$906 million, with strong performances from On-Demand services (+17% YoY) and Financial Services (+34% YoY). PATMI outperformed due to operating leverage and higher-margin monetisation. Q: What are the key growth drivers for Grab's mobility segment? A: Growth is driven by expansion beyond the core app through travel partnerships, technology investments in AI dispatch and routing optimisation, and improved marketplace productivity that has increased driver earnings per online hour by 29%. Q: How is GrabMart contributing to the deliveries business? A: GrabMart is growing 1.7 times faster than GrabFood, supported by deeper supermarket integration, improved fresh-item fulfilment, and the GrabMore feature. Users increased 30% year-on-year but still represent only 10% of Deliveries GMV. Q: What efficiency improvements has Grab achieved in its mobility operations? A: Driver earnings per online hour increased 29% whilst average trip fares decreased 16% from 2021-2025, as drivers complete more trips efficiently. EBITDA margin expanded 20 basis points to 8.6%. Q: What is the growth potential for GrabMart? A: GrabMart represents significant penetration potential as it accounts for only 10% of Deliveries GMV and online grocery penetration in Southeast Asia remains in low single digits, providing substantial runway for expansion. Q: How has Grab's business model evolved? A: Grab has successfully transformed into a higher-margin, ecosystem-led monetisation model, moving beyond its original ride-hailing focus to encompass comprehensive on-demand and financial services with expanding margins. 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.
Lendlease Global Commercial REIT Strengthens Retail Portfolio with PLQ Mall Acquisition
Company Overview Lendlease Global Commercial REIT (LREIT) is a Singapore-listed real estate investment trust that focuses on commercial properties, with a substantial retail portfolio that has grown to represent 63% of its total portfolio value following recent acquisitions. Strong Half-Year Performance LREIT delivered a resilient performance in the first half of FY26, with distribution per unit (DPU) rising 3.1% year-on-year to 1.85 cents, representing 51% of the full-year forecast. The trust achieved an 11.7% year-on-year increase in distributable income to S$48.5 million, driven by strong retail rental reversion of 10.4% and disciplined capital management that reduced gearing by 430 basis points to 38.4%. Strategic PLQ Mall Acquisition Enhances Portfolio The acquisition of a 70% stake in PLQ Mall from ADIA for S$885 million at a 2.1% discount to appraised value represents a significant strategic move. The acquisition is 2.5% DPU accretive and strengthens LREIT's suburban retail portfolio, which now comprises 63% of total portfolio value at S$3.9 billion, up from 55% at S$3.3 billion. PLQ Mall boasts over 200 tenants with 99.7% committed occupancy and a weighted average lease expiry of 2.3 years. Disciplined Capital Management Delivers Results LREIT has demonstrated strong financial discipline by reducing gross debt by S$500 million to approximately S$1.2 billion. The trust successfully refinanced S$200 million of perpetual securities with S$120 million of new issuance at a lower coupon rate, reducing from 5.25% to 4.75% per annum. This, combined with cheaper loan funding, compressed the cost of debt by 19 basis points to 2.90%. With 72% of borrowings fixed-rate hedged and S$701.2 million in available facilities covering the S$100 million FY26 debt maturity, refinancing risk remains minimal. Positive Rental Reversion Outlook The acquisition of Jem in FY2022 compressed portfolio occupancy cost by over 600 basis points to 23.7%, creating headroom for rental increases. PLQ Mall, having been under-rented since its Covid-period opening when occupancy was prioritised over rent optimisation, presents significant rental uplift potential. Ongoing reconfiguration works are expected to drive rental increases from single digits to the high teens percentage range. Investment Recommendation Phillip Securities Research maintains a BUY recommendation with a raised target price of S$0.73, up from S$0.70, based on a dividend discount model incorporating PLQ Mall's contribution. The trust currently trades at a FY26 estimated yield of 5.9% and at approximately 28% discount to net asset value. Frequently Asked Questions Q: What was LREIT's DPU performance in 1H26? A: LREIT achieved a DPU of 1.85 cents in 1H26, representing a 3.1% year-on-year increase and forming 51% of the full-year FY26 forecast. Q: How significant is the PLQ Mall acquisition? A: The acquisition of 70% of PLQ Mall for S$885 million is 2.5% DPU accretive and increases the suburban retail portfolio to 63% of total portfolio value at S$3.9 billion from the previous 55% at S$3.3 billion. Q: What is the current gearing ratio and how has it changed? A: The gearing ratio has improved significantly, falling 430 basis points to 38.4% due to disciplined capital management and debt reduction of S$500 million. Q: What is the rental reversion performance across the portfolio? A: The retail portfolio achieved rental reversion of 10.4% year-on-year, with approximately 7% excluding PLQ Mall's contribution, and this is expected to continue at double digits for the remainder of FY26. 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$0.73, up from the previous S$0.70, based on a dividend discount model. Q: How well-positioned is LREIT for debt refinancing? A: LREIT has minimal near-term refinancing risk with S$701.2 million in available facilities covering the S$100 million FY26 debt maturity, and 72% of borrowings are fixed-rate hedged. Q: What potential upside catalysts exist for the trust? A: Upside catalysts include a potential accretive divestment of Milan Building 3 and a larger-than-expected distribution from the S$8.9 million Jem office divestment gain yet to be deployed. Q: At what valuation metrics is LREIT currently trading? A: LREIT currently trades at a FY26 estimated yield of 5.9% and at approximately 28% discount to net asset value. 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.
United Hampshire US REIT Delivers Strong Performance Amid Portfolio Stability
Company Overview United Hampshire US REIT (UHREIT) is a real estate investment trust focused on grocery, necessity retail properties, and self-storage facilities in the United States. Since its IPO in 2020, the REIT has built a diversified portfolio anchored by essential retail tenants, providing defensive characteristics and steady income streams. Strong Financial Performance UHREIT reported robust results for 2H25 and FY25, with distribution per unit (DPU) reaching 2.30 US cents and 4.39 US cents respectively, which represents an impressive year-on-year growth of 12.2% and 8.1%. The performance aligned with expectations, forming 54% and 103% of full-year forecasts. This growth stemmed from new lease commencements, contributions from the newly acquired Dover Marketplace in August 2025, rental escalations on existing leases, and reduced finance costs. Portfolio Resilience and Valuation Growth The REIT's grocery and necessity properties demonstrated exceptional stability with occupancy maintaining a high level of 97.7%, up from 97% in the third quarter. Portfolio valuations increased 3.8% year-on-year on a same-store basis, marking the fifth consecutive year of valuation growth since the company's public listing. This increase was driven by stronger operating performance and marginal cap rate compression. Key Strengths Supporting Long-term Growth UHREIT's financial position reflects prudent capital management with no refinancing requirements until 2028. The all-in cost of debt has declined from 5.21% in the first quarter to 5.01% in the fourth quarter of 2025. With 76% of debt on fixed rates, further interest savings are anticipated in 2026, with debt costs expected to fall to approximately 4.6%. The company maintains healthy leverage at 38.6% and an interest coverage ratio of 2.4 times. The portfolio's stability is underpinned by a weighted average lease expiry of 7.7 years, a 90% tenant retention rate, and minimal leasing risk in 2026, with only 2.9% of grocery and necessity leases expiring. Operational Challenges Self-storage properties experienced a seasonal decline in occupancy to 88.7% from 94.9% in the third quarter, attributed to the slower winter leasing period and tenant turnover. However, rental rates continue trending upwards, presenting opportunities to lease vacant units at higher rents during the upcoming spring peak leasing season. Investment Recommendation Phillip Securities Research maintains a BUY recommendation with an unchanged target price of US$0.69 based on dividend discount model valuation. UHREIT currently trades at an attractive FY26 dividend yield of 8.4% and price-to-net asset value of 0.76 times. Frequently Asked Questions Q: What drove UHREIT's strong DPU growth in 2H25 and FY25? A: Growth was driven by new lease commencements, contributions from Dover Marketplace acquired in August 2025, rental escalations on existing leases, and lower finance costs. Q: How has the portfolio valuation performed since UHREIT's IPO? A: Portfolio valuations have grown for five consecutive years since the 2020 IPO, with the latest increase of 3.8% year-on-year driven by stronger operating performance and marginal cap rate compression. Q: What is the current occupancy rate across different property types? A: Grocery and necessity properties maintained high occupancy at 97.7%, while self-storage properties saw occupancy decline to 88.7% due to seasonal factors and tenant turnover. Q: How is UHREIT managing its debt obligations? A: The company has no refinancing requirements until 2028, with debt costs declining from 5.21% to 5.01% and expected to fall to approximately 4.6% in 2026. Aggregate leverage stands at a healthy 38.6%. Q: What factors underpin the portfolio's stability? A: The portfolio benefits from strong grocery and necessity occupancy of 97.7%, a long weighted average lease expiry of 7.7 years, a 90% tenant retention rate, and minimal leasing risk in 2026 with only 2.9% of leases expiring. Q: What is Phillip Securities Research's recommendation and target price? A: Phillip Securities Research maintains a BUY recommendation with an unchanged target price of US$0.69 based on dividend discount model valuation. Q: What are the key risks facing the REIT? A: The main operational challenge is seasonal occupancy decline in self-storage properties during winter months, though this presents opportunities to lease units at higher rents during the spring peak season. Q: What is the current dividend yield and valuation multiple? A: UHREIT trades at an attractive FY26 dividend yield of 8.4% and price-to-net asset value of 0.76 times. 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.
CDL Hospitality Trusts: Lease-Based Cash Flows Support Improving Leverage Profile
Company Overview CDL Hospitality Trusts (CDLHT) is a Singapore-listed stapled trust comprising CDL Hospitality Real Estate Investment Trust (H-REIT) and CDL Hospitality Business Trust (HBT). The group owns a diversified portfolio of hospitality and living assets across 11 cities in 8 countries, including Singapore, the UK, Japan, Australia, New Zealand, Germany, Italy and the Maldives. As at end-FY2025, CDLHT’s portfolio comprised 22 operating assets with assets under management of ~S$3.5bn. The trust is sponsored by Millennium & Copthorne Hotels Limited, part of the Hong Leong Group controlled by Singaporean businessman Kwek Leng Beng. FY2025 Credit Performance Highlights CDLHT’s income profile is largely lease-based, with 81.5% of FY2025 NPI derived from leased assets, which supports earnings stability during periods of operational disruption. On a full-year basis, FY2025 performance remained soft, with reported NPI declining 4.1% YoY, reflecting AEI-related disruption at W Singapore and Grand Millennium Auckland that weighed on earnings for much of the year. Excluding assets undergoing AEI, FY2025 NPI was broadly stable at +0.3% YoY, as stronger contributions from the UK, Australia and Japan were largely offset by normalisation in more volatile markets such as the Maldives, as well as declines in smaller European assets. Importantly, performance improved into 2H25, with total NPI rising 3.5% YoY, and 2H25 NPI increasing 6.3% YoY when excluding AEI assets, pointing to a better earnings run-rate as refurbishment impacts eased. With major AEIs largely completed, management guides for earnings and cash-flow improvement from 2026, supported by asset re-launch effects, higher RevPAR potential and stabilising contributions from UK living assets. Leverage improved on a year-on-year basis, with gearing declining to 37.7% at end-FY2025 from 40.7% at end-FY2024, reflecting disciplined capital management. Interest coverage remained stable at 2.3x, despite AEI-related earnings disruption. Liquidity strengthened meaningfully, with cash and available facilities increasing to ~S$593.5mn from S$526.0mn, while a 95.7% unencumbered asset base continues to provide flexibility to manage refinancing needs and absorb near-term earnings volatility. CDLHT has refinanced all 2025 debt maturities, extending debt tenors and lowering borrowing costs. The weighted average debt maturity stands at around 2.6 years, with borrowings skewed toward 3–5-year facilities. A growing proportion of debt is structured as sustainability-linked loans, which are typically lower-cost and more readily extendable, reducing refinancing and liquidity risk. This has smoothed the maturity profile and supports more predictable interest cash outflows as earnings recover. Looking ahead, growth visibility is supported by the forward purchase of Moxy Singapore Clarke Quay, with TOP expected around end-2026, which does not require near-term capital outlay. Overseas assets provide additional medium-term support: Ibis Perth is seeing earnings normalisation following refurbishment, The Castings is expected to move beyond its initial gestation phase from 2026 and contribute to income ramp-up, while Benson Yard benefits from high committed occupancy under academic-year leases, providing a stable and predictable rental income stream. Credit View: We hold a positive view on CDL Hospitality Trusts’ credit profile. Credit quality is supported by a high proportion of contracted lease-based income, which provides cash-flow visibility and helped limit earnings volatility through the AEI-impacted FY2025. While full-year FY2025 performance remained soft, leverage improved year on year, and liquidity remains strong, with a largely unencumbered asset base supporting refinancing flexibility. Overview of CDL Hospitality Trusts’ Outstanding SGD Bonds 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.
IOI Properties (IOIPG): Asset-Backed AAIS Credit
Company Overview IOI Properties Group Berhad (IOIPG) is a Malaysian property developer and investment group with a diversified footprint across Malaysia, Singapore, and China. Its businesses span property development, property investment, and hospitality & leisure, with key assets including IOI City Mall, IOI Central Boulevard Towers (Singapore), and multiple integrated townships across Malaysia. The group is majority owned by the Lee Shin Cheng family (~65.7), and is rated AAIS (MARC). FY25 Credit Performance Highlights IOIPG delivered stable topline performance in FY25. Revenue rose 4% YoY to RM3.06bn, supported by stronger contributions from Property Investment and Hospitality & Leisure, which offset a softer development cycle following the absence of land sales that had boosted FY24 results. Property Development remained the largest revenue contributor at 54% (RM1.65bn), followed by Property Investment at 31% (RM945mn) and Hospitality & Leisure at 15% (RM466mn), highlighting a gradually improving but still development-weighted revenue mix. Recurring income continued to strengthen. Property Investment revenue rose 46% YoY, driven by the full-year contribution from IOI Central Boulevard Towers, sustained high occupancy at IOI City Mall, and the acquisition of IOI Mall Damansara in December 2024. Segment operating profit increased in tandem to RM467mn, with margins remaining healthy at 49%, reinforcing the stability and cash-generative nature of the investment portfolio. Office contributions rose meaningfully as IOI Central Boulevard Towers ramped up, with commitment rates reaching 88% as at July 2025. The Hospitality & Leisure segment also showed a marked recovery. Segment revenue surged 70% YoY to RM450mn, while operating losses narrowed sharply to approximately RM5mn, from RM115mn in FY24, reflecting contributions from newly acquired and opened hotels as well as improved occupancy across refurbished assets. While the segment remains marginally loss-making, its drag on group earnings has reduced materially. IOIPG’s credit profile remains strongly asset-backed. Total assets increased by 2% YoY to RM46.9bn, supported by fair value gains on investment properties and selective asset acquisitions, which continue to underpin collateral quality and creditor recovery prospects. Total equity stood at RM24.5bn, providing a substantial capital buffer consistent with its AAIS rating. However, leverage remains elevated on a cash-earnings basis. Total borrowings increased modestly to RM19.6bn, largely to fund Singapore projects, while net gearing remained stable at 0.70x, reflecting an uplift in shareholders’ equity from property revaluations rather than balance-sheet deleveraging. In parallel, total debt/EBITDA rose to 10.6x in FY25 from 8.1x in FY24, highlighting higher leverage following the normalisation of EBITDA post-completion of IOI Central Boulevard Towers. Interest coverage softened as interest expense rose materially on the full-year funding impact of IOI Central, resulting in more moderate coverage metrics and reduced buffer against earnings volatility. Liquidity is adequate but requires ongoing discipline. Cash and cash equivalents increased to RM2.49bn at FY25, supported by operating cash inflows and a meaningful reduction in completed inventories to RM1.27bn, down 34% YoY, improving near-term cash conversion. Credit view: IOIPG’s AAIS credit profile is supported by strong tangible asset backing, a robust equity base, and a steadily improving recurring-income platform. However, the credit remains liquidity-sensitive, given elevated leverage and a still development-weighted cash-flow profile. 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.
StarHub: Stable Consumer Base, but Credit Story Now Hinges on Margin and FCF Repair
Company Overview StarHub Ltd is a Singapore telecom operator providing Mobile, Broadband, Pay TV, Enterprise ICT, and Cybersecurity services. The shareholder base is anchored by Temasek (via ST Telemedia / STT Communications, ~56%) and NTT Group (~10%), which supports franchise stability and access to strategic partnerships. 3Q25 Credit Performance Highlights StarHub’s consumer franchise remains the cash-flow anchor, with low churn supporting predictability despite ongoing pricing pressure. Mobile churn is 1.3%, and broadband churn is 1.0%, while subscriber additions (+50k QoQ to 2.187mn) help offset softer mobile ARPU (S$22). Broadband growth (+1.4% YoY) also points to steady upselling momentum, keeping the core subscription base a stabiliser for leverage and debt service. The quality of revenues is gradually improving as Enterprise and Cybersecurity continue to scale, offering higher-margin, recurring B2B cash flows that reduce reliance on consumer cyclicality. Cybersecurity grew +17.0% YoY and Managed Services +3.2% YoY, supported by its Modern Digital Infrastructure platform. A +5.7% YoY increase in the orderbook and deeper regional Enterprise integration (SG–MY) strengthen visibility, which is credit-positive given it diversifies the earnings engine beyond consumer ARPU dynamics. That said, the near-term credit narrative is increasingly about execution. EBITDA softened to S$105.9mn (–7.6% YoY) and service EBITDA margin compressed to 20.6%, reflecting weaker mobile/entertainment gross profit and higher operating costs. With DARE+ completed, management is now in the “harvest” phase, targeting ~S$60mn cost savings over FY26–FY28. Delivery will be key to rebuilding margins and restoring free cash flow. FCF remains tight: 3Q25 FCF was S$123.6mn, but 9M25 FCF turned negative (–S$48.2mn) once spectrum-related payments are included; even excluding spectrum, 9M FCF of S$139.8mn (–16.4% YoY) highlights pressure from elevated investment commitments and weaker operating cash generation. Looking ahead, the main watchpoints are (i) whether EBITDA and margins stabilise, further slippage would narrow headroom within the current leverage range, and (ii) whether cost-out execution translates into real FCF recovery, particularly as spectrum and investment commitments continue to compete for cash. The risk is less about near-term solvency and more about buffer erosion: without a clearer rebound in operating cash generation, deleveraging becomes harder, and the credit story stays capped. Credit view: StarHub’s credit profile remains stable on the back of a sticky subscription base and still-healthy interest coverage, but it is now more constrained by execution risk than balance-sheet stress. In our view, sustained margin repair, EBITDA stabilisation, and a credible improvement in free cash flow are the key requirements to preserve credit buffers and the path to any meaningful spread tightening will depend on demonstrating that these improvements are durable rather than one-off. Overview of StarHub Ltd’s Outstanding SGD Bonds 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.
Shangri-La Hotel (SLHSP): High leverage mitigated liquidity and sponsor support
Company Overview Shangri-La Asia Ltd (SLHSP) is the Hong Kong–listed flagship of the Kuok Group, multinational conglomerate founded by Malaysian tycoon Robert Kuok. operating 90+ hotels and mixed-use properties under the Shangri-La, Kerry, and JEN brands. Earnings are concentrated in Mainland China and Hong Kong, with the remainder from Southeast Asia and other international markets. The group is unrated and majority-owned by the Kuok Group-related entity (63.1%) 1H25 Credit Performance Highlights Operating performance continued to recover in 1H25, albeit at a subdued pace. Revenue increased marginally by 0.7% YoY to approximately US$1.06bn, as stronger investment property contributions were largely offset by softer hotel demand in China and Singapore. EBITDA was broadly flat at US$252mn (23.8% margin), supported by a ~2% YoY improvement in RevPAR, led by Hong Kong. However, EBITDA remains below pre-pandemic levels, suggesting that the earnings recovery has plateaued and has yet to translate into material balance-sheet repair. As a result, leverage remains structurally elevated and coverage buffers thin. With earnings recovery constrained, gross debt remained high at around US$7.2bn in 1H25, translating into leverage of approximately 14× Debt/EBITDA, elevated for a hotel owner-operator. Interest coverage stood at a modest 2.3×, benefiting from a reduction in average funding costs to 3.98% from 4.45% in FY24. Nonetheless, coverage remains sensitive to earnings volatility, reinforcing the limited margin for operating underperformance. Cash flow generation remains insufficient to meaningfully reduce leverage. The pressure on the balance sheet is further reflected in cash flow metrics. Operating cash flow in 1H25 was US$59.9mn, broadly flat YoY, while free cash flow amounted to US$35.8mn. Operating cash flow continues to be largely absorbed by recurring capital expenditure required to sustain the existing asset base, limiting cash available for debt reduction. This funding reliance elevates the importance of asset quality and sponsor support. In this context, Shangri-La’s franchise strength and ownership of prime hotel assets provide meaningful downside protection. Brand equity underpins continued access to funding and offers optionality for capital recycling, while geographic diversification across Greater China and overseas markets helps mitigate concentration risk. Importantly, Kuok Group sponsorship remains a key credit anchor, supported by long-standing banking relationships, capital-market access and a demonstrated track record of balance-sheet support during periods of weak earnings. Strong liquidity mitigates near-term refinancing risk despite elevated leverage. Liquidity therefore becomes the primary mitigating factor. As of 1H25, SLHSP held US$2.67bn of cash and US$0.73bn of undrawn committed facilities, providing total available liquidity of around US$3.4bn. Importantly, the liquidity is assessed against refinancing needs rather than total debt. Debt maturities are well-staggered at roughly US$0.7–1.6bn per annum through 2029, with available liquidity comfortably covering more than 24 months of maturities, supporting low near-term refinancing risk.
OUE REIT: Prime Singapore Assets Support BBB- Profile
Company Overview OUE Real Estate Investment Trust (OUE REIT) is a S$5.8bn AUM Singapore-centric diversified REIT with exposure to office (48%), hospitality (36%), and retail (16%). Key assets include One Raffles Place, OUE Bayfront, OUE Downtown Office, Mandarin Gallery, Hilton Singapore Orchard, and Crowne Plaza Changi Airport. Major shareholders include Temasek (9.31%), OCBC (1.25%), and Prudential (0.75%). The REIT is rated BBB- (S&P). FY2025 Credit Performance Highlights Reported operating metrics declined in FY2025, with revenue falling 7.4% YoY to S$273.6mn and NPI declining 6.2% YoY to S$219.6mn. This was primarily due to the absence of contributions from Lippo Plaza Shanghai following its divestment in December 2024, rather than operating weakness. Excluding this asset, underlying performance remained stable, with like-for-like revenue and NPI increasing 0.1% YoY and 1.6% YoY, respectively, supported by steady Singapore office demand and stable hospitality operations. Portfolio quality continues to underpin cash-flow resilience. Core assets such as One Raffles Place, OUE Bayfront and OUE Downtown Office anchor the portfolio in prime CBD locations, while hospitality exposure is provided by Hilton Singapore Orchard and Crowne Plaza Changi Airport. Portfolio occupancy remained high at 95.4%, reflecting the defensive nature of centrally located Singapore assets and sustained tenant demand. The income mix is supportive, with the commercial segment contributing approximately 64% of total revenue, providing stable, contracted cash flows with positive rental reversions. Hospitality earnings are structurally de-risked through long-term master lease agreements incorporating minimum rent floors of S$67.5mn per annum, materially limiting downside volatility and enhancing cash-flow predictability for bondholders. The most meaningful credit improvement in FY2025 came through lower funding costs. Finance costs declined 17.6% YoY to S$87.8mn, reflecting a more favourable interest-rate environment and proactive balance-sheet optimisation. This translated into a 13.9% YoY increase in amount available for distribution to S$123.8mn, signalling stronger cash retained after interest and improved cash-flow conversion despite lower reported revenue. Balance-sheet metrics strengthened further following deleveraging. Aggregate leverage declined to 38.5% from 39.9% in FY2024, supported by debt repayment using divestment proceeds. Total debt stood at approximately S$2.17bn, while the weighted average cost of debt fell to 3.9% p.a. from 4.7% a year earlier. Fixed-rate exposure increased to 79.2%, reducing near-term rate sensitivity, and interest coverage improved to 2.4x, providing a reasonable buffer within the BBB- rating category. Liquidity risk remains well contained. Debt maturities are well staggered, with no more than 18.5% of total debt maturing in any single year, limiting refinancing pressure. Funding is diversified between bank borrowings (53.9%) and MTNs (46.1%), while balance-sheet flexibility is preserved by 83.0% unsecured debt and 87.0% unencumbered assets, supporting continued access to funding even under stressed market conditions. Credit view: We remain constructive on OUE REIT’s credit profile. The portfolio continues to generate resilient cash flows, while lower funding costs and disciplined capital management have materially improved debt sustainability. The leverage has improved to 38.5% and the improvement in interest coverage, high fixed-rate exposure and strong liquidity buffers mitigate downside risks. Overview of OUE’s Outstanding SGD Bonds 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.
