Balanced funds
Table of Contents
Balanced funds
Financial professionals have traditionally urged investors to establish a diversified portfolio with holdings in various securities and asset types. Diversification helps reduce the risk involved in multiple investments, but investors frequently choose low-yield or riskier investments to diversify their portfolios. A form of mutual fund called a balanced fund, often called a hybrid fund, has a fixed ratio of stock and bond investments in its portfolios. These mutual funds assist investors in portfolio diversification by investing in asset classes, including debt and equity.
What is a balanced fund?
Balanced funds are investment products that invest in various assets, mainly debt, and equity; however, these funds are frequently geared towards one asset class over the other, with a more significant share invested there. Asset allocation funds, often known as balanced funds, are a subset of hybrid funds.
Balanced funds provide a balanced strategy for investing in the markets by attempting to reduce risk with a debt component and moderate capital growth through shares. The goal is to protect investors’ money more than risky equities funds. The fund’s main asset class determines taxes on balanced funds. One that leans towards stock will be taxed similarly to equity mutual funds.
Understanding balanced funds
A hybrid fund, an investment vehicle distinguished by its diversification over two or more asset classes, is a balanced fund. Each asset type the fund invests in often has a minimum and maximum value that it must stay within.
An asset allocation fund is another term for a balanced fund. Unlike life-cycle funds, which alter their holdings to reduce risk as an investor’s retirement date approaches, balanced fund portfolios do not significantly change their asset mix. Additionally, actively managed funds differ from balanced funds, which may vary due to an investor’s shifting risk-return preferences or the state of the general investment market.
What is the purpose of a balanced mutual fund?
A balanced mutual fund has two halves that have separate functions. This investment plan’s equity component helps stop investors’ purchasing power loss. They need comparatively less capital commitment because they invest primarily in stocks.
The price of an equity fund is determined by the net asset value (NAV) of the fund minus its liabilities, and this mutual fund favours larger, dividend-paying corporations in its equity holdings. The remaining corpus of the balanced mutual funds is invested in debt-oriented schemes to counteract the risks posed by equity funds. Bonds and other debt securities are the primary investments in the scheme’s debt section. Despite having lower returns than equities funds, they nonetheless fulfil two goals. They first assist in generating a source of revenue.
Additionally, they aid in reducing the portfolio‘s volatility. They significantly lessen the susceptibility of investments because they are far more secure than equity investments.
The fund is the best choice for investors with a low-risk tolerance and looking for investment options that can make up for growth that is outperforming inflation while also producing income that can help supplement investors’ financial needs. They assist those who have no source of income in developing a reliable source of income so they can save up enough money to cover their basic needs.
Advantages of balanced funds
The advantages of balanced funds include the following:
- When compared to the debt markets, there are instances when the equity markets are overvalued, and vice versa. In these circumstances, the fund manager can switch between the two main asset classes and balance the fund’s performance against market swings.
- Hybrid funds provide diversification as a single mutual fund. This enables fund managers to diversify their portfolios by including investments from several asset classes, such as debt, money market instruments, and equity. Diversification among asset classes has the combined benefits of reducing risk and maximising capital growth.
- Balanced funds operate as a hedge against inflation due to their specific asset allocation, wherein the debt component gives consistent income while the equity component seeks to provide greater returns.
- Pure equities fund investments carry a considerable risk due to the potential for dramatic equity market declines. As a result, the debt portion of balanced funds assists investors in balancing out the risk that the equity portion presents.
Disadvantages of balanced funds
The disadvantages of balanced funds include the following:
- The status ratio of 60/40 balanced funds used for fund allocation could be more optimal.
- Balanced funds provide investors with a steady income stream by investing in large-cap companies rather than smaller and more profitable small and mid-cap enterprises. It implies that you would make less money.
- The diversification of your portfolio can be increased by including international stocks. But most balanced funds disregard global markets.
Frequently Asked Questions
The following categories are used to categorise balanced funds:
- Equity-oriented balanced funds
At least 65% of the corpus of these hybrid funds is invested in equities and equity-related instruments. The remaining corpus is invested in debt instruments or even money market assets to ensure stability during unpredictable market conditions.
- Debt-oriented balanced funds
At least 65% of the corpus of these hybrid funds is allocated to debt securities. Investments in fixed-income assets like Treasury Bills, Debentures, Bonds, Government assets, etc., are part of the scheme’s debt component. To add liquidity, a portion of the fund could also be invested in cash and cash equivalents.
Balanced funds are perfect for investors looking for income, moderate capital growth, and income from their mutual fund investments. To balance the risks and profits, those with a low-risk tolerance, such as seniors, might invest in these mutual funds.
The elements of a Balanced Fund Portfolio are:
- Component of equity
The equity component ensures the long-term preservation of retirement savings and helps stop the loss of purchasing power.
- Bonding element
A balanced fund’s bond portion serves two functions. They create a source of income and reduce the price fluctuations of the portfolio’s equity component.
All hybrid funds evenly distribute their assets between stocks and debt securities. However, a more significant amount of investments may tilt the balance in favour of one asset class. Balanced funds, on the other hand, divide the fund corpus equally between the two asset classes.
A balanced capital ratio is distributed between debt and equity in balanced funds. Balanced advantage funds, on the other hand, invest your money according to market conditions in both debt and equity instruments.
Related Terms
- Funding Ratio
- Enhanced Index Fund
- No-Load Fund
- Back-End Load Funds
- Appreciation Funds
- International Value Funds
- Small-Cap Value Funds
- Debt Funds
- Pension Funds
- Broad Market Index Funds
- Mid-cap value funds
- Large Cap Value Funds
- Sector Specific Value Funds
- Ultra-Short Bond Funds
- Sub-Advised Fund
- Funding Ratio
- Enhanced Index Fund
- No-Load Fund
- Back-End Load Funds
- Appreciation Funds
- International Value Funds
- Small-Cap Value Funds
- Debt Funds
- Pension Funds
- Broad Market Index Funds
- Mid-cap value funds
- Large Cap Value Funds
- Sector Specific Value Funds
- Ultra-Short Bond Funds
- Sub-Advised Fund
- Provident Fund
- Sovereign Wealth Funds
- Management Fees
- Clone Funds
- Net asset value per unit
- Closed-End Funds
- Fixed Maturity Plans
- Prime Money Market Fund
- Tax-Exempt Money Market Fund
- Value Fund
- Load Fund
- Fund Family
- Venture Capital Fund
- Blue Chip Fund
- Back-end loading
- Income fund
- Stock Fund
- Specialty Fund
- Series fund
- Sector fund
- Prime rate fund
- Margin call
- Settlement currency
- Federal funds rate
- Sovereign Wealth Fund
- New fund offer
- Commingled funds
- Taft-Hartley funds
- Umbrella Funds
- Late-stage funding
- Short-term fund
- Regional Fund
- In-house Funds
- Redemption Price
- Index Fund
- Fund Domicile
- Net Fund Assets
- Forward Pricing
- Mutual Funds Distributor
- International fund
- Balanced Mutual Fund
- Value stock fund
- Liquid funds
- Focused Fund
- Dynamic bond funds
- Global fund
- Close-ended schemes
- Feeder funds
- Passive funds
- Gilt funds
- Tracker fund
- Actively managed fund
- Endowment Fund
- Target-date fund
- Lifecycle funds
- Hedge Funds
- Trust fund
- Recovering funds
- Sector funds
- Open-ended funds
- Arbitrage funds
- Term Fed funds
- Value-style funds
- Thematic funds
- Growth-style funds
- Equity fund
- Capital preservation fund
Most Popular Terms
Other Terms
- Bond Convexity
- Compound Yield
- Brokerage Account
- Discretionary Accounts
- Industry Groups
- Growth Rate
- Green Bond Principles
- Gamma Scalping
- Free-Float Methodology
- Foreign Direct Investment (FDI)
- Floating Dividend Rate
- Flight to Quality
- Real Return
- Protective Put
- Perpetual Bond
- Option Adjusted Spread (OAS)
- Non-Diversifiable Risk
- Merger Arbitrage
- Liability-Driven Investment (LDI)
- Income Bonds
- Guaranteed Investment Contract (GIC)
- Flash Crash
- Equity Carve-Outs
- Cost of Equity
- Cost Basis
- Deferred Annuity
- Cash-on-Cash Return
- Earning Surprise
- Capital Adequacy Ratio (CAR)
- Bubble
- Beta Risk
- Bear Spread
- Asset Play
- Accrued Market Discount
- Ladder Strategy
- Junk Status
- Intrinsic Value of Stock
- Interest-Only Bonds (IO)
- Interest Coverage Ratio
- Inflation Hedge
- Industry Groups
- Incremental Yield
- Industrial Bonds
- Income Statement
- Holding Period Return
- Historical Volatility (HV)
- Hedge Effectiveness
- Flat Yield Curve
- Fallen Angel
- Exotic Options
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Phillip SING Income ETF Reaches All-Time High Dividend with Banking Sector Focus
Brief Overview Phillip Securities Research maintains an ACCUMULATE recommendation on Phillip SING Income ETF (SINGINC) with an increased target price of S$1.82, up from the previous S$1.59. The ETF has experienced portfolio rebalancing with increased banking sector concentration, while DBS Group and Singapore Exchange remain key holdings alongside new top holding Oversea-Chinese Banking Corporation. The firm remains constructive on SINGINC as its dividend reaches an all-time high, supported by stronger distributions from the portfolio. Investment Positives The primary strength of SINGINC lies in its dividend performance, which has reached an all-time high. This achievement is underpinned by stronger distributions from the portfolio, particularly benefiting from the ETF's large exposure to Singapore banks. The ETF demonstrates strong diversification across six sectors, with financials representing the largest allocation at 44.2% and REITs comprising 21.8% of the portfolio. This diversified approach provides balanced exposure across Singapore's key income-generating sectors. Recent portfolio changes reflect strategic positioning towards Singapore's banking sector. Oversea-Chinese Banking Corporation has become the largest holding at 11.4%, while DBS Group's weight increased slightly from 10.3% to 10.7%. This greater concentration in Singapore's banking sector among the portfolio's largest positions, places the ETF to benefit from the sector's performance. Looking ahead, resilient bank earnings and dividends are expected to continue supporting income generation. Additionally, a more favourable interest-rate environment for REITs should enhance the performance of the ETF's second-largest sector allocation. Outlook Phillip Securities Research maintains a constructive outlook on SINGINC. The combination of resilient bank earnings and dividends, alongside a more favourable interest-rate environment for REITs, should continue supporting income generation. Singapore's market revitalisation initiatives are expected to provide an additional catalyst for performance. Recommendation & Target Price Phillip Securities Research maintains an ACCUMULATE recommendation on Phillip SING Income ETF. The target price has been increased to S$1.82 from the previous S$1.59, derived using equal weightage between historical dividend yield spread valuation (S$2.20) and price-to-earnings ratio valuation (S$1.44). Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.
Phillip Securities Sees Singapore Banks Delivering Robust Performance Despite Margin Pressures
Brief Overview Phillip Securities Research highlights that Singapore interest rates climbed for the third consecutive month in July, with loan growth surpassing 9% year-on-year for the first time since COVID. The firm's second quarter 2026 bank earnings analysis shows performance exceeded expectations, driven by record fee and trading income, despite continued net interest income (NII) declines. The research house maintains its positive stance on the sector while acknowledging mixed guidance updates from major banks. Investment Positives The team identifies several compelling reasons for optimism in Singapore banking. Loan growth has become a significant positive catalyst, crossing the 9% year-on-year threshold for the first time since the pandemic, with June 2026 recording 9.2% growth. This volume of expansion is compensating for what interest margins cannot deliver, representing a fundamental shift in the growth dynamic. Record fee and trading income performance stands out as key earnings drivers. These non-interest revenues more than offset another quarter of declining NII during the second quarter of 2026, with the analyst expecting this trend to continue delivering results through the second half of 2026. CASA deposits demonstrated robust growth of 16% year-on-year, maintaining the CASA ratio at 20.6% of total deposits. This performance is particularly valuable as it keeps funding costs contained despite the challenging interest rate environment. DBS and OCBC have raised their full-year 2026 earnings guidance, signalling management confidence in their business outlook. OCBC specifically increased its loan growth guidance, reinforcing the positive volume of momentum across the sector. The analyst notes that banks' dividend yields remain attractive at 4.0% for FY26e, supported by share buyback programmes and capital return dividends that bolster return on equity. Investment Negatives Net interest margins continue to face pressure, declining 17-22 basis points across the three major banks during the quarter. This margin compression represents an ongoing headwind that volume growth is working to offset rather than eliminate. The Monetary Authority of Singapore's policy tightening on 27 July, which steepened the Singapore dollar NEER appreciation slope to around 1.25% from approximately 1.00%, creates a counteracting force against rising SORA rates. A stronger Singapore dollar works to lower SGD rates, potentially capping the net interest margin recovery rather than reversing the decline. The Monetary Authority of Singapore's policy tightening on 27 July, which steepened the Singapore dollar NEER appreciation slope to around 1.25% from approximately 1.00%, creates a counteracting force against rising SORA rates. A stronger Singapore dollar works to lower SGD rates, potentially capping the net interest margin recovery rather than reversing the decline. UOB reduced its fee growth guidance to low single digits from previously high single digits, indicating some uncertainty around non-interest income sustainability across all institutions. The analyst expects NII to turn positive year-on-year only towards the fourth quarter of 2026, suggesting continued near-term pressure on this core revenue stream. Outlook The research suggests SORA will hold around current levels through the second half of 2026 rather than climb further, limiting the scope for significant margin expansion. However, the combination of strong volume growth and robust non-interest income is expected to support overall earnings momentum. Recommendation & Target Price Phillip Securities Research maintains an ACCUMULATE recommendation on Singapore banks. The firm expresses preference for DBS, citing its fixed dividend per share policy and raised FY26e guidance, and OCBC, highlighting wealth management momentum and remaining capital return potential. No specific target prices are provided in the report. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.
Soilbuild Construction Maintains Strength Despite Project Delays
Brief Overview Soilbuild Construction Group Ltd delivered mixed 1H26 results with revenue and profit below expectations, primarily due to significant delays in precast project recognition. However, the company demonstrated resilience with 25.8% year-on-year profit growth driven by strong construction segment performance and margin expansion, whilst maintaining its dividend appeal through increased payout ratios. Investment Positives The standout positive for TeleChoice centres on the strong momentum in its PCS division. PCS revenue grew an impressive 25% year-on-year in 1H26 to S$205mn, whilst profit before tax spiked 140% to S$6.1mn. This growth was driven by U Mobile's expansion in mobile subscribers, with handset demand receiving additional support from promotional activities and increased subsidies as more consumers transition from prepaid to postpaid plans. Margin performance proved particularly impressive, with 1H26 net margins expanding by 1.9 percentage points year-on-year to 12.3%. This represents an 8.2 percentage point premium over average local peers' net margins of 4.1%, achieved through operational scale benefits and timely project deliveries. The company's balance sheet strength improved markedly, with 1H26 net cash turning positive to S$138 million compared to 1H25 net debt of S$0.6 million. This transformation was driven by 18% year-on-year higher operating cash flow to S$56.5 million, whilst receivables fell S$30.7 million half-on-half, freeing up working capital. Shareholder returns increased substantially through a higher dividend payout ratio. The proposed interim dividend of 1.6 cents per share represents a 2.2 times year-on-year increase from 0.5 cents per share in 1H25. The 1H26 dividend payout ratio increased by 18 percentage points year-on-year, supported by the stronger balance sheet. Investment Negatives Precast segment performance presented challenges, with revenue declining 59% to S$24.2 million due to project recognition delays. Many precast projects remained in the design phase, creating timing differences that impacted overall revenue achievement. Order book size decreased to S$800 million from S$1.19 billion in 1H25, representing a 32.8% decline following progress on major projects with exceptional scale, reducing visibility for future performance. Outlook Production is expected to ramp up in 2H26 and into 1H27 as precast projects advance beyond the design phase. Higher industrial demand is anticipated as 29% more industrial land is released from the Industrial Government Land Sales programme for 2H26. The company is expected to gradually win more tenders and expand its order book size beyond S$1 billion. Recommendation & Target Price Phillip Securities Research maintains a BUY recommendation with an unchanged target price of S$1.20. The valuation multiple was lowered from 9 times to 8.5 times FY27 price-to-earnings ratio to reflect lower visibility from the smaller order book. The company trades at an FY26 dividend yield of approximately 6.2%. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.
UltraGreen.ai – One small step for rival, no giant leap
Brief Overview Zydus Lifesciences announced on 4 Aug 26 that it had secured 180-day Competitive Generic Therapy exclusivity from the FDA for a generic ICG dye, introducing the first credible competitor to UltraGreen.ai's US franchise. UltraGreen.ai's share price dropped 30.7% yesterday following this news. Despite this development, Phillip Securities Research believes the FDA approval for Zydus is not an imminent threat to UltraGreen.ai. Investment Positives Several factors support UltraGreen.ai's defensive position against new competition. The company has established significant operational advantages that will be difficult for new entrants to replicate quickly. UltraGreen.ai has spent years building its current capacity of approximately 3 million vials per year, supported by exclusive evergreen API contracts, dedicated lyophilisation capacity and a multi-contract manufacturing organisation network. The company benefits from established market relationships that new competitors must develop from scratch. New entrants need to establish hospital and group purchasing organisation relationships, whilst hospitals have little incentive to switch from a proven supplier. UltraGreen.ai's competitive moat is reinforced by its focused approach and integrated platform. ICG is the company's sole product focus, unlike diversified generics players such as Zydus Lifesciences. The company's position is further strengthened by its camera and software platform, and by a regulatory dossier built over 15 years. Additionally, the 180-day CGT exclusivity that Zydus has secured actually blocks other generic makers from using the Abbreviated New Drug Application pathway to get approval, limiting future competitors from entering the market for that period. UltraGreen.ai will continue to sell ICG vials in the US during this exclusivity period. Investment Negatives The primary concern is aggressive pricing competition from new entrants. There is a risk that Zydus may compete aggressively on price, undercutting the market significantly to gain market share. This potential pricing pressure has led to reductions in earnings forecasts, with FY26e and FY27e PATMI reduced by 3% and 6% respectively to account for this risk. Outlook Whilst competition has emerged, the analyst believes UltraGreen.ai's established infrastructure and market position provide significant defensive advantages. The company's focused approach to ICG, combined with its integrated platform and long-established regulatory dossier, should help maintain its market position despite new competition. Recommendation & Target Price Phillip Securities Research maintains a BUY recommendation for UltraGreen.ai with a lower DCF-based target price of US$1.81, reduced from the previous US$1.91. The company trades at an FY26e P/E of 9.9x. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.
CNMC Gold Maintains Buy Rating Despite Production Headwinds, Target Price Cut to S$2.03
Phillip Securities Research has maintained its BUY recommendation on CNMC whilst cutting its target price to S$2.03 from S$2.34, as higher gold prices help offset declining production volumes from the company's mining operations. Company Overview CNMC operates gold mining activities with fine gold comprising approximately 76% of its total revenue. The company is currently undertaking a significant US$12 million underground mine construction project at New Found and Manson's Lode, targeted for completion by the end of 2027. Strong Financial Performance Despite Volume Challenges The company demonstrated resilient financial performance in the first half of fiscal 2026, with revenue increasing 23.4% year-on-year to US$65.2 million and profit after tax and minority interests rising 17.8% to US$18.6 million. This growth was primarily driven by a substantial 40% increase in fine gold's average selling price to US$4,486 per ounce. Key Positives Supporting Performance Fine gold revenue, which represents the company's largest revenue stream, surged 31% year-on-year to US$49.8 million despite lower production volumes across all metals. The significant price appreciation in precious metals proved crucial, with gold prices rising 40% and silver prices increasing by an impressive 95% year-on-year. This pricing strength successfully offset the negative impact of reduced mining volumes. The underground mine construction project continues to progress according to schedule, with both the hoisting system and surface infrastructure already completed at New Found and Manson's Lode sites. The next phase involves shaft excavation as part of the comprehensive development programme. Operational Challenges and Revised Outlook However, the company faces production headwinds from lower-grade ore extraction through open-pit mining operations. This has prompted Phillip Securities Research to reduce its fiscal 2026 earnings forecast by 18%, reflecting a 7% reduction in the gold average selling price assumption to US$4,500 per ounce and a 16% decline in expected production volume to 23,957 ounces. The mining operations also contend with higher diesel prices and the challenge of spreading fixed costs over lower output levels, which impacts operational efficiency. CNMC currently trades at 11.7 times forward fiscal 2026 price-to-earnings ratio. The valuation methodology excludes terminal value assumptions, with the analysis based on the mining permit's validity through 2034. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. 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Strong Half-Year Performance Underpins Income Visibility United Hampshire US REIT (UHREIT), a defensive real estate investment trust focused on grocery, necessity retail, and self-storage properties in the United States, has delivered a solid first-half performance that reinforces its position as an income-focused investment. The REIT reported net property income of US$25.5 million for 1H26, representing a 6.4% year-on-year increase, whilst distribution per unit grew 3.3% to 2.16 US cents. Phillip Securities Research has reiterated its BUY recommendation with an unchanged dividend discount model-based target price of US$0.69, highlighting the trust's strong income visibility and attractive current trading yield. Operational Excellence Drives Performance The company's performance was bolstered by several key operational achievements and strategic acquisitions. New lease commencements, rental escalations, and contributions from recently acquired properties Dover Marketplace and Wallingford Fair Shopping Centre, purchased in August 2025 and January 2026 respectively, drove the distributable income growth. However, this was partially offset by higher finance costs resulting from additional borrowings used to fund these acquisitions. Strong Fundamentals Support Defensive Appeal UHREIT's defensive characteristics remain firmly intact, with grocery and necessity properties maintaining exceptionally high occupancy at 97.6%, demonstrating the resilient nature of essential retail properties. The self-storage segment showed notable improvement, with occupancy rising 430 basis points to 93.5%, driven by the peak spring leasing season. Average quarterly net rental rates remained healthy across the portfolio, with Millburn Self-Storage showing slight increases whilst Carteret Self-Storage rates remained broadly stable. The trust signed 260,000 square feet of leases during the first half at positive rent reversion, underlining strong tenant demand. A significant competitive advantage lies in UHREIT's limited near-term leasing risk, with only 0.6% and 4.6% of grocery and necessity leases expiring in FY26 and FY27 respectively. Improving Financial Metrics Financial management continues to strengthen, with the all-in cost of debt improving to 4.89% from 5.13% year-on-year and expected to decline further to 4.7% in FY26. The trust maintains 71.5% of debt on fixed rates, providing protection against interest rate volatility. Aggregate leverage improved to 40.4% and is projected to decline to approximately 37% following the divestment of BJ's Quincy. UHREIT currently trades at an attractive FY26 estimated dividend yield of 8.8%, supported by a long weighted average lease expiry of 7.9 years and high tenant retention rate of 90%. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. 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Centurion Corporation Maintains Strong Growth Trajectory with BUY Rating and S$1.94 Target Price
Centurion Corporation Ltd (CCL), a leading provider of purpose-built worker accommodation (PBWA) and student accommodation across Singapore, Malaysia, Australia, and the UK, has demonstrated robust growth momentum in its 1H26 results. The company operates a diversified portfolio of accommodation assets serving both migrant workers and students across multiple markets. Strong Revenue Growth Driven by Strategic Acquisitions CCL's revenue performance has been particularly impressive, with first-half 2026 revenue surging 31% year-on-year to S$184.9 million, marking the company's strongest growth since the first half of 2022. This exceptional performance was primarily driven by a series of strategic acquisitions and asset enhancement initiatives across key markets. The revenue acceleration reflects several major acquisitions that have significantly expanded CCL's capacity. The company acquired an additional 55% stake in the 8,006-bed Westlite Mandai Purpose-Built Workers' Accommodation (PBWA) facility, representing 19% of Singapore's capacity. In Malaysia, CCL acquired the 7,083-bed Harum Megah PBWA, adding 20% to the country's capacity. The Australian market saw the addition of the 732-bed EPIISOD Macquarie Park facility, which boosted Australia's PBSA capacity by 82%. Beyond acquisitions, ongoing asset enhancement initiatives have contributed substantially to growth. These projects added 5,460 beds, representing a 13% increase in Singapore capacity through expansions at Westlite Toh Guan and Westlite Mandai PBWA facilities, which are currently in the occupancy ramp-up phase. Market Dynamics Signal Continued Demand A significant positive development for CCL came through securing a three-year lease extension from JTC for the 1,224-bed Westlite Tuas Avenue 2 quick build dormitory, with options for an additional 3.5-year extension. This extension indicates a shortage of worker dormitories in Singapore, particularly given the progress of major construction projects including Changi Terminal 5, Marina Bay Sands Integrated Resort, healthcare facilities, and Cross Island Line construction. Investment Outlook and Guidance Phillip Securities Research maintains a BUY recommendation with an upgraded target price of S$1.94, increased from the previous S$1.85. The revised valuation incorporates CCL's 7,000-bed Kranji Close PBWA project and improved quick build dormitory valuations. CCL has provided forward revenue guidance of S$190 million for the second half of 2026, representing 22% year-on-year growth, with total beds expected to grow at a 5% compound annual growth rate through 2028. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. 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Frencken Group Ltd, a leading provider of precision engineering and manufacturing services across semiconductor, medical, automotive, and industrial automation sectors, has received an upgraded rating from Phillip Securities Research following its 1H26 results and improved outlook for the remainder of the year. Mixed First Half Performance Sets Stage for Recovery The company's 1H26 revenue and profit after tax and minority interests (PATMI) came in within expectations, representing 47% and 45% of full-year forecasts respectively. PATMI declined 3% year-on-year to S$19.2 million, primarily due to anticipated weakness in semiconductor and analytical life science segments. However, this decline was partially offset by robust performance in medical, industrial automation, and automotive divisions. Key Positive Developments Drive Optimism The medical segment showed particularly strong momentum, with 2Q26 revenue accelerating to 16% year-on-year growth, reaching S$35.8 million compared to just 5% growth in 1Q26. This acceleration was driven by increased orders from Europe for digital pathology equipment, highlighting the company's strong positioning in advanced medical technology manufacturing. Industrial automation also demonstrated resilience, with 2Q26 revenue rebounding 19% year-on-year to S$10.8 million following a 1% decline in 1Q26. This recovery was attributed to higher orders from the company's data storage customer, though management cautioned that 2H26 industrial automation revenue is expected to decline due to changes in customer sourcing arrangements. The automotive segment maintained steady growth momentum, with 1H26 revenue advancing 10% year-on-year to S$32.2 million. This performance was underpinned by increased production of radar antennas. Notably, Frencken's European automotive customer is transitioning from pilot production in Sweden to high-volume production in China, with management guiding a production ramp that will increase volumes quarter-by-quarter over the next two years. Second Half Recovery Expected Phillip Securities Research anticipates 2H26 growth in Frencken's semiconductor, automotive, and medical segments will offset the projected decline in industrial automation. The semiconductor outlook appears particularly promising, with DUV and metrology demand expected to surge for the company's Netherlands front-end semiconductor customer in 2H26. Additionally, some demand pull-in is anticipated from automotive customers. Based on these developments, Phillip Securities Research upgraded Frencken Group to BUY from ACCUMULATE whilst maintaining the target price at S$3.30, representing a valuation of 29x FY27 price-to-earnings ratio. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. 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