Advance Decline Line
The advance-decline line (A/D line) is a basic but frequently overlooked tool market analysts and traders use. The number of stocks that have increased and decreased is monitored through the A/D Line, which gives an overview of the breadth of the market. This helps identify market trends better as well as possible reversal points. This blog post aims to explain what calculation entails and its importance in analyzing markets while giving examples from different fields where this concept has been used.
Table of Contents
Advance Decline Line
The number of rising stocks minus the number of falling stocks forms the Advance-Decline Line or the AD Line, an overall measure. Whenever advances outweigh decreases, Net Advancements are favourable; when losses outweigh advances, it is unfavourable. A progressive indicator of Net Advances, which means that the AD Line increases in positive value and decreases in negative value.
What is the Advance Decline Line?
An advance decline is a technical indicator that shows the daily difference between the number of advancing and declining stocks. A positive number is added to the previous number in the cumulative indicator, and a negative number is deducted from the previous amount.
The A/D line, which indicates to traders whether more stocks are rising or dropping, depicts market mood. When divergence occurs, it can alert investors to potential reversals and confirm price patterns in important indices.
- The advance/decline (A/D) line is a breadth indicator that displays the number of stocks involved in a stock market rally or decline.
- A rising A/D line indicates robust participation in the uptrend while major markets are rallying.
- Major indices may be reaching the end of their climb if the A/D line is declining, and the index is rallying despite fewer stocks participating.
- A sinking advance/decline line indicates a downtrend in key indices.
- Fewer stocks are decreasing over time when major indexes are declining, and the A/D line is increasing, suggesting that the index may be nearing the conclusion of its decline.
Understanding the Advance Decline Line
In order to depict stock involvement with a market hazard or loss, the advance-decline graph is utilised. Stocks having a larger market value could have an outsized impact on a particular index’s success because there are so many capital-weighted indices such as the S&P 500, DJIA, and NASDAQ Composite. As a result, the ADL gives investors information on the involvement of all shares as an indicator of the marketplace’s direction.
Investors are interested in knowing if, for instance, a capitalisation-weighted index of securities increased by 3% as a result of the vast majority of companies rising or as a result of an organisation with a significant weight on that index performing well.
Calculations of the Advance Decline Line
Formula required:
A/D = Net Advances + PA if a PA value exists, and 0 if there is no PA value.
where:
Net Advances = difference between the number of daily
ascending and declining stocks
PA=Previous Advances
Previous Advances = Prior Indicator Reading
Here is how it is calculated:
- Daily Calculation: Every day at the end of trading, count the number of stocks that went up and the number that went down (declines)
- Net Advances: Find out net advances for the day by deducting declining stock figures from advancing ones
- Cumulative A/D Line: Begin with an initial value (usually zero), then add today’s net advance to yesterday’s cumulative total. This will give you running totals showing the overall breadth of market trends.
Uses of the Advance-Decline Line
The A/D Line has several key uses for analyzing markets:
- Confirmation of Trend: It confirms the direction of the major market indices. A rising A/D line with an index indicates that there is widespread participation in the market rally, which shows strength. On the other hand, if the market keeps going up but the A/D line falls, then this might mean it is not very strong.
- Divergence Signals: Divergence between the A/D Line and a major index could be a sign for potential reversal points. An instance of such divergence would be when an index continues climbing upwards while its corresponding accumulation distribution line starts dropping down; fewer shares participate in the advance, thereby suggesting weakening conditions.
- Identifying Overbought or Oversold Conditions: To identify whether the market is overbought or oversold, one can look at extreme readings in the A/D line. For example, if a market index is making new highs while the A/D Line fails to do so or shows a divergence, it could mean that the market is overbought, and a correction may be due.
- Assessing Market Breadth: Market breadth, which involves the number of stocks involved in a market move, can be understood through the A/D line. A strong A/D line shows widespread participation among stocks, many of which are advancing along with general security prices, thus making for healthier and more sustainable bull markets. Conversely, if an index goes up but only a few shares do likewise (as indicated by a weak A/D line), then this increase is likely to be short-lived.
Benefits of the Advance Decline Line
There are many benefits to using an advance-decline line. First off, it aids current as well as prospective investors in evaluating and assessing the stock market’s overall success. The reason for this is that by examining each stock separately, the A/D line will show how the indices fluctuate. As a result, it is crucial to comprehend and utilize the A/D line in order to ensure that as a prospective investor, one possesses a more accurate picture of the state of the stock market.
It is also significant since it may help provide a daily summary of deals, making it essential for shareholders. Lastly, the A/D line is significant as it can show economic divergence in the market as well.
Example of the Advance Decline Line
The A/D line is used by traders for comparing it with the index’s fluctuation in prices.
It is used to verify the trajectory of an index for monitoring. For instance, when it is making higher levels, one wants to observe the A/D line making higher levels.
The stock market has entered an upward trajectory if the benchmark index plus the A/D line both continue making new highs. The uptrend may be nearing its conclusion if the market for shares hits a new top amd the A/D line achieves a peak that is smaller compared to the prior rally. This is because fewer companies are engaging in an increased advance. This can imply that a small number of companies with bigger market capitalisation are responsible for the marketplace’s success.
Frequently Asked Questions
TRIN is a temporary trading instrument that gauges stock exchange volatility. By evaluating the amount they flow, TRIN indicates the connection between progressing and decreasing concerns. A market is said to be weak or strong depending on whether the TRIN is growing or declining.
While traders employ the advance-decline line, an economic equity market indication, to count the total amount of distinct stocks involved in a sector’s rise or fall.
Usually employed as a more stable indicator, the A/D line displays the number of stocks that are increasing and dropping as time passes. On the other hand, the Arms Index or the TRIN is a more immediate indicator, and gauges the proportion of gaining shares to increasing volume.
When evaluating the worth of stocks or other assets that have gained in price to those that have declined in value throughout the course of the data, the advance-decline ratio is identified. The figures can be used for any calculation period, from one day to infinity.
The amount of Advancing Stock / Number of Declining Stock is the Advance-Decline Ratio.
A lot of progressing stock is a term used to describe stocks or other kinds of assets that are rising, such as their value. Contrarily, the term “number of declining stocks” describes the number of shares or securities that are in a downward trend, that is, whose values have dropped relative to their prior levels.
A stock’s advance-decline line may be employed to determine how many parts within an assortment are advancing upward or downward. A technical gauge called the overall advance/decline (A/D) line displays the ratio of gaining equities to descending stocks. It serves as a breadth indicator that conveys the mood of the stock market.
The stock is deemed to be experiencing an unchanging or decreasing trend if the ratio equals one or lower. The share price is on an upward trend if the proportion is bigger than one. The share price is in an upward trajectory if the proportion is above two.
The advance/decline or the A/D line serves as a breadth indicator that displays the number of stocks taking part in an economic rise or collapse. Whenever major indices have been on the rise, an increasing A/D line reinforces the upward trajectory and demonstrates substantial participation. It may be utilised for determining the number of an organisation’s constituents that are rising or falling.
Related Terms
- Gamma Scalping
- Free-Float Methodology
- Flight to Quality
- Equity Carve-Outs
- Ladder Strategy
- Event-Driven Strategy
- Dividend Capture Strategy
- Credit Default Swap (CDS)
- Company Fundamentals
- Buy And Hold Strategy
- Withdrawal Plan
- Basis Risk
- Barbell Strategy
- Risk budgeting
- Trading Strategy
- Gamma Scalping
- Free-Float Methodology
- Flight to Quality
- Equity Carve-Outs
- Ladder Strategy
- Event-Driven Strategy
- Dividend Capture Strategy
- Credit Default Swap (CDS)
- Company Fundamentals
- Buy And Hold Strategy
- Withdrawal Plan
- Basis Risk
- Barbell Strategy
- Risk budgeting
- Trading Strategy
- High-Yield Investment Programs
- Risk Appetite
- Portfolio Diversification
- Closing Transaction
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- Correlation Coefficient
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- Long/Short Strategy
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- Gearing
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- Resting Order
- Buy to opening
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- Yield Pickup
- Contrarian Strategy
- Interpolation
- Intrapreneur
- Hyperledger composer
- Horizontal Integration
- Queueing Theory
- Homestead exemption
- The barbell strategy
- Retirement Planning
- Credit spreads
- Stress test
- Accrual accounting
- Growth options
- Growth Plan
- Accumulation Distribution Line
- Box Spread
- Charting
- Advance refunding
- Accelerated depreciation
- Amortisation
- Accrual strategy
- Hedged Tender
- Value investing
- Long-term investment strategy
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- Variable Annuity
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- Bond Convexity
- Compound Yield
- Brokerage Account
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- Growth Rate
- Green Bond Principles
- Funding Ratio
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- Interest Coverage Ratio
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Lion-Phillip S-REIT ETF: Analysts Maintain Positive Outlook Despite Rate Headwinds
Brief Overview Phillip Securities Research maintains its ACCUMULATE recommendation on Lion-Phillip S-REIT ETF (SREITS) with a reduced target price of S$0.85, down from S$0.90. The ETF has undergone portfolio changes with Keppel DC REIT becoming the top holding, replacing CapitaLand Ascendas REIT, while Mapletree Logistics Trust remains the third-largest position. The fund continues to offer diversified exposure across retail, commercial, industrial and data-centre assets, balancing stable income with growth opportunities. Investment Positives The ETF's strongest advantage lies in its well-diversified portfolio structure across eight property sectors. Industrial assets form the largest allocation at 35.6%, followed by retail at 17.5%, providing investors with broad exposure across Singapore's REIT market while reducing concentration risk in any single sector. The diversified exposure to retail, commercial, industrial, and data-centre assets create a balanced investment proposition that combines stable rental income streams with structural growth opportunities. This diversificiation allows the ETF to benefit from different property cycles and tenant demand patterns across various sectors. Looking ahead, analysts expect organic rental growth to support the ETF's performance. In addition, easing domestic financing costs should provide tailwinds for the underlying REITs, contributing to a gradual recovery in distribution per unit (DPU) through FY27. Challenges The primary concern facing the ETF is uncertainty over the interest-rate outlook, which may limit near-term valuation upside. Interest rate movements typically have an inverse relationship with REIT valuations, and the current uncertain environment creates headwinds for immediate price appreciation. Outlook Despite near-term challenges from interest rate uncertainty, the analysts maintain a constructive medium-term outlook. The combination of organic rental growth and easing domestic financing costs is expected to support a gradual recovery in DPU throughFY27, providing a pathway for improved performance as interest rate concerns subside. Recommendation & Target Price Phillip Securities Research maintains its ACCUMULATE recommendation for Lion-Phillip S-REIT ETF. The analysts have lowered their target price to S$0.85 from the previous S$0.90, derived using a combination of historical dividend yield spread and price-to-book ratio methodologies, with equal weighting applied to both valuation approaches. 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.
Semiconductor Sector Shows Strong Growth Acceleration Led by Custom ASIC Players
Brief Overview The semiconductor sector has demonstrated mixed performance over the past three months, with the Semiconductor ETF rising 2.4% but underperforming the S&P500's 4.1% gain. Equipment players faced headwinds due to elevated valuations, while memory companies declined amid HBM4 shipment uncertainties. However, enterprise and sovereign AI buildout is driving higher demand, with Coreweave and Nebius' combined remaining performance obligations reaching US$141 billion in June 2026. Investment Positives The semiconductor sector presents compelling growth opportunities across multiple segments. Custom ASIC companies are leading the acceleration, with Broadcom and Marvell guiding 3Q26e revenue to surge 89% year-on-year to a combined US$38 billion, surpassing the combined growth guidance of 83% from NVIDIA and AMD. Equipment manufacturers are experiencing robust demand, with their combined 3Q26e revenue guided to reach 52% year-on-year growth to US$31.4 billion, representing potentially the largest growth since 2021. This equipment demand is underpinned by TSMC's increased capital expenditure guidance of US$62 billion, marking a 15% increase, alongside memory players' higher equipment spending as new fabrication facilities ramp up production. The broadening customer base strengthens the sector's resilience. Coreweave and Nebius have expanded their client roster to include major enterprises such as Caterpillar, Grammarly, Databricks, Reflection, AI neolabs and quantitative trading firms. This diversification across AI neoclouds, enterprises and sovereign nations makes NVIDIA and AMD's growth more resilient should hyperscaler capital expenditure moderate. From a valuation perspective, large-cap SaaS companies are trading at roughly -1 standard deviation, with an EV/Sales multiple of 9.5x versus their 3-year average of 10.8x, suggesting attractive valuations despite strong performance. Enterprise and sovereign nations' AI buildout continues to drive substantial demand growth, with Coreweave and Nebius' combined remaining performance obligations increasing 72% from December 2025 to reach US$141 billion by June 2026. Challenges Valuation concerns persist in certain segments of the semiconductor sector. Equipment players AMAT and Lam Research have experienced significant pullbacks, declining 10.6% and 3.7% respectively, as they trade at elevated forward price-to-earnings ratios of 40x and 34x, compared with the sector average of 27x. Memory companies face headwinds from currency fluctuations and product transition uncertainties. SK Hynix declined 17% while Samsung fell 1.9%, laregly due to uncertainty surrounding HBM4 shipment timelines and the impact of a stronger Korean won on their financial performance. Outlook The outlook for the semiconductor sector remains positive, supported by accelerating growth across the custom ASIC, equipment and foundry segments. Revenue growth acceleration is expected in 3Q26e across these key areas, with custom ASIC companies leading the charge. The diversification of AI demand across multiple customer segments provides additional stability to the growth trajectory. Recommendation & Target Price Phillip Securities Research maintains an OVERWEIGHT recommendation on the semiconductor sector, reflecting confidence in the strong growth momentum of custom ASIC companies, equipment manufacturers and foundry operations. 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.
Software Sector Stages Strong Recovery as AI Concerns Subside
Brief Overview The software industry has experienced a significant re-rating, with the iShares Software ETF (IGV) rebounding 17% in 3Q26 and now sitting just 7% below its September 2025 peak. SaaS LTM revenue growth accelerated to 17.5% YoY in 2Q26, marking the strongest growth in 15 quarters. Phillip Securities Research maintains an OVERWEIGHT stance on software, favouring SaaS infrastructure, data analytics, and cybersecurity as key AI beneficiaries. Investment Positives The software sector's recovery has been driven by easing concerns over AI disruption, with market leader Microsoft surging 30% following its 4Q26 results. Microsoft's performance was supported by Azure growth exceeding 40% YoY, no unexpected incremental capital expenditure announcements despite peers raising spending, and the introduction of usage-based billing. The rebound has also extended to data and AI platform companies, with Palantir gaining 61% and Snowflake rising 35% during the quarter. Salesforce also advanced following the launch of Claudeforce, its joint application with Anthropic, reinforcing the value of proprietary enterprise data despite increasingly capable AI models. Large-cap SaaS companies continue to outperform, benefiting from AI-tier upgrades, usage-based pricing, and seat expansion. These companies are enjoying higher sales growth of 18.2%, which is 0.7 percentage points higher year-on-year, as enterprises spend more on higher-priced AI tiers, increase adoption of usage-based pricing, and expand seat usage. Excluding Microsoft and Oracle, growth remained healthy at 16.3%. From a valuation perspective, large-cap SaaS companies are trading at roughly -1 standard deviation, with an EV/Sales multiple of 9.5x versus their 3-year average of 10.8x, suggesting attractive valuations despite strong performance. Challenges Cybersecurity valuations remain elevated, with companies trading at stretched multiples. This has led to concerns about sustainability of current price levels in this subsector, despite its strong year-to-date performance. Outlook The software sector appears to be emerging from what the research describes as the "SaaSpocalypse", with growth rates expected to persist in 3Q26e. The preferred investment areas include SaaS infrastructure, data analytics, and cybersecurity as key AI beneficiaries. Top picks are supported by strong AI adoption, expanding backlog conversion, and rising enterprise data demand. Recommendation & Target Price Phillip Securities Research maintains an OVERWEIGHT recommendation on the software sector. Preferred names include Microsoft, Oracle, Palantir, and Snowflake. However, the firm has downgraded Palo Alto Networks to NEUTRAL, as its valuation appears stretched, trading at 97x P/E versus its 5-year average of 54x. 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.
Stoneweg Europe Stapled Trust Pursues Growth Through Management Internalisation
Brief Overview Stoneweg Europe Stapled Trust (SERT) is proposing to internalise its manager for €114 million at a 14% discount to independent valuation, creating a fully integrated European logistics and digital infrastructure platform with approximately €3.2 billion of assets under management. The transaction will be funded through issuing 40 million stapled securities to sponsor SWI Group at €2.00 each, representing a 33% premium to the last traded price of €1.50. Phillip Securities Research maintains a BUY recommendation with an unchanged target price of €1.89, highlighting the deal's immediate distribution per stapled security (DPS) accretion and growth potential. Investment Positives The internalisation presents compelling value creation opportunities for SERT. The acquisition pricing appears attractive at 7.1x P/EBIT based on the effective consideration of €94mn, significantly below the independent valuer's 10.1x multiple. This favourable valuation provides SERT with immediate financial benefits. The transaction is expected to deliver substantial DPS accretion of 5.9%, supported by approximately €11 million in third-party asset management fees and the elimination of external management fees. Even when excluding third-party asset management contracts, the deal remains 3.1% DPS accretive, demonstrating the inherent value of the internalisation structure. Strategically, the transaction brings SERT's pan-European logistics and light-industrial operating capabilities in-house while preserving access to growth opportunities. Strategic cooperation agreements maintain exclusive access to SWI Group's European logistics and light-industrial opportunitie, as well as preferred access to specialist data centre capabilities. This supports SERT's ambition to increase its logistics and light-industrial exposure towards 70% of its portfolio from the current 55.7%. Upon completion, SERT will manage approximately €3.2 billion of AUM and combine recurring property income with asset management earnings. The internalisation allows SERT to retain acquisition and asset management fees from future acquisitions, creating additional revenue streams and enhancing long-term profitability. Challenges The completion of this transaction faces several hurdles, remaining subject to regulatory and third-party consents, as well as securityholder approval at an extraordinary general meeting. These requirements introduce execution risk and potential delays to the anticipated benefits. Outlook The internalisation represents a significant strategic shift for SERT, positioning the trust as a fully integrated platform capable of capturing both property income and asset management earnings. The transaction also provides potential for further growth through data centre conversions and SERT's stake in AiOnX, while maintaining access to SWI Group's pipeline of opportunities. Recommendation & Target Price Phillip Securities Research maintains a BUY recommendation with an unchanged dividend discount model-derived target price of €1.89. The research house remains positive on the transaction given its immediate DPS accretion and potential to capture additional earnings from the integrated operating platform. 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.
Brief Overview Phillip Securities Research has initiated coverage on Frasers Logistics & Commercial Trust (FLCT) with a BUY recommendation and a target price of S$1.01. The research highlights FLCT's resilient logistics and industrial portfolio, substantial acquisition pipeline from sponsor FPL, and attractive forward dividend yields of 6.8%. The trust is currently trading at a 21% discount to NAV. Investment Positives FLCT's logistics and industrial portfolio forms the cornerstone of its investment appeal, comprising 75.3% of portfolio value with an exceptional occupancy of 99.7%. The portfolio benefits from predominantly freehold and long leasehold assets, providing stable foundations for earnings generation. Rental growth prospects remain strong, with rental reversions reaching 11.9% in 3Q26 on an incoming-versus-outgoing basis and an impressive 23.8% on an average-versus-average basis. This reflects strong rental uplift amid tight market conditions and resilient domestic demand. The portfolio also benefits from built-in rental escalations, including annual increases averaging 3.2% in Australia and CPI-linked leases in Europe, supporting recurring rental income and organic DPU growth. The trust's acquisition capabilities represent a significant growth driver. FLCT has access to a sizeable ROFR pipeline exceeding S$5 billion from sponsor FPL, representing approximately 70% of its existing portfolio value. This provides substantial opportunities for inorganic DPU growth. The trust has demonstrated execution capability through its recent €294.9 million (S$441.5 million) acquisition of four logistics properties in Germany and the Netherlands, expected to be 1.7% DPU accretive. The commercial portfolio offers additional upside potential through backfilling opportunities. ATP is now 85.3% occupied following successful backfilling of approximately 83% of space previously vacated by Google, whilst UK business parks achieved occupancy rates between 81.5% and 87.6%. Further backfilling of remaining vacancies could provide meaningful earnings enhancement. Challenges The research notes that FLCT's commercial portfolio currently operates at an occupancy rate of 88.4%, indicating that vacancy challenges remain and need to be addressed to optimise returns. Outlook The analysts forecast FY26e and FY27e DPU of 5.90 cents and 5.93 cents respectively, translating to attractive forward dividend yields of 6.8%. Potential re-rating catalysts include DPU-accretive acquisitions, divestments of mature non-core assets for capital recycling, and continued commercial portfolio backfilling. Recommendation & Target Price Phillip Securities Research has initiated coverage with a BUY recommendation and DDM-derived target price of S$1.01. The trust trades at a 21% discount to NAV, representing a level that is 1.4 standard deviations below its historical mean P/NAV. 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. 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JEP Holdings Ltd Positioned for Multi-Year Growth in Semiconductors and Aerospace
Brief Overview Phillip Securities Research has initiated coverage of JEP Holdings Ltd with a positive outlook, highlighting the company's strategic pivot from traditional aerospace manufacturing to specialised semiconductor components. The analyst expects the company to benefit from a new partnership with a major semiconductor customer, continued aerospace recovery, and organic growth through its parent company, UMS Integration. Net profit is projected to almost quadruple from FY25 to FY27e. Investment Positives The most significant growth driver identified is JEP's partnership with a major front-end semiconductor customer to supply specialised plastic components. These components are believed to be used in wet etch, deposition and plating processes of advanced semiconductor packaging for next-generation AI chips. JEP has proactively invested in new capacity ahead of what the analyst expects to be a multi-year ramp, with the company increasing capex spending by more than 2x year-on-year to S$20.6 million in FY25 to expand capabilities in Singapore. Mass production of these specialised plastic components is expected to drive equipment revenue in FY27e up by more than 100% year-on-year to approximately S$50 million. The aerospace segment presents another compelling opportunity, with stronger demand emerging from improved aircraft deliveries. Bottlenecks in aircraft deliveries are easing, and widebody deliveries are expected to increase by 13% CAGR over the next three years. Boeing has increased its 787 Dreamliner production target from 8 to 10 jets monthly by 2026 and expects the first delivery of its 777X widebody jet programme by 2027e. JEP's aerospace revenue rose 37.5% year-on-year to S$15.8 million in 1H26, driven by stronger widebody aircraft deliveries. The company also benefits from its relationship with its parent company UMS Integration, with approximately 30% of JEP's semiconductor metal part orders coming from UMS. The analyst notes that JEP's aerospace-grade machining capabilities can be applied to manufacturing semiconductor parts. In 1H26, semiconductor revenue surged 23% year-on-year to S$8.4 million, driven by AI-led semiconductor capex upcycle. Challenges The report does not explicitly identify significant investment challenges or risks facing JEP Holdings. Outlook The analyst maintains an optimistic outlook, expecting JEP to ride on the organic growth of its parent company UMS Integration. As both UMS and JEP's key semiconductor front-end equipment customers have raised expectations for 2026 WFE spend to approximately US$150 billion (previously US$135-140 billion), this is expected to drive demand for JEP's semiconductor revenue. Recommendation & Target Price Phillip Securities Research initiates coverage with a BUY recommendation and target price of S$0.83. The target price is based on 28x FY27e P/E, representing a 7% discount to peers' average forward P/E of 30x. 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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Snowflake Inc – Growth from Rising Coding and AI Agent Activities
Brief Overview Phillip Securities Research highlights that rising enterprise data volumes and AI adoption are accelerating cloud-native platform adoption, with the global data lake market projected to reach US$45.8 billion by 2030. AI products contributed roughly half of 2Q27 growth acceleration, with CoCo and CoWork surpassing 9,100 and 5,800 adopted accounts respectively, helping drive 37% YoY product revenue growth. The firm initiates coverage with a BUY recommendation and DCF-based target price of US$423. Investment Positives The investment case for Snowflake is anchored on several compelling growth drivers. Rising enterprise data volumes and AI adoption are accelerating the shift from on-premises infrastructure to cloud-native data platforms. Enterprises increasingly require scalable, cost-efficient storage and compute capabilities to manage growing datasets and support AI workloads, driving demand for modern data architectures. IBM estimates the global data lake market will reach US$45.8 billion by 2030, representing a 23.9% CAGR from 2024, supporting a sizeable long-term growth opportunity for Snowflake. AI products are proving to be a significant catalyst, contributing roughly half of growth acceleration in 2Q27. This was driven by the rising adoption of CoCo and CoWork, with over 9,100 and 5,800 adopted accounts respectively. Expanding AI coding, agent, and application development workloads helped drive 37% YoY product revenue growth to US$1.5 billion in 2Q27 and contributed to Snowflake's strongest revenue growth in three years. The consumption-based model provides significant leverage to AI adoption. With 95% of revenue being consumption-based, usage is directly linked to revenue. Growing analytics and AI workloads drive higher compute usage, with AI being far more compute-intensive than traditional analytics. Growth is driven by both new customers and higher consumption from existing customers. Customers purchase credits upfront and consume them as workloads run, whilst higher-value products drive greater usage, credit consumption, and spending. Challenges The report does not explicitly outline specific investment challenges or risks facing Snowflake. Outlook The analyst forecasts strong growth momentum, projecting product revenue to grow 36% YoY to US$6.08 billion in FY27e, with adjusted EPS rising 63% YoY and an adjusted FCF margin of 23.8%. The consumption-based revenue model directly links AI-driven compute usage to revenue growth as customers consume more credits and increase spending on higher-value workloads. Recommendation & Target Price Phillip Securities Research initiates coverage with a BUY recommendation and a DCF-based target price of US$423, based on a 5.7% WACC and 5.1% terminal growth rate. 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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City Developments Limited Charts Clear Growth Path with Strategic Overhaul
Brief Overview City Developments Limited has unveiled its 'GET+' three-year roadmap for FY27-FY29, positioning Singapore as its core market while executing a major exit from Australia across all sectors except hospitality assets. The strategic review targets S$5 billion of growth investments and S$6 billion of divestments to unlock value and achieve deleveraging goals. The company aims to establish a dedicated fund management platform to double assets under management to S$10 billion across listed and private platforms. Investment Positives The strategic review delivers several compelling growth drivers that strengthen CDL's investment proposition. The roadmap provides greater clarity on capital allocation priorities and establishes a credible path to deleveraging, addressing a key concern for investors. The S$6 billion divestment programme represents a significant value unlock opportunity, with over S$1 billion of profit after tax and minority interests expected from divestment gains, equivalent to approximately S$1.12 per share. The monetisation strategy is well-diversified, comprising S$2.7 billion in commercial assets, S$1.8 billion in hotels, and S$1 billion in residential properties across the UK and Australia. CDL's fund management expansion offers particularly attractive prospects for sustainable growth. The dedicated fund management entity aims to double assets under management from S$5 billion to S$10 billion by FY29, encompassing both listed REIT platforms and an expanded private capital platform through funds, partnerships and joint ventures. This initiative supports a more capital-light growth model whilst building a recurring fee income stream and improving capital efficiency, potentially supporting higher return on equity over time. The company's development pipeline remains robust, with over S$6 billion of projected property development cash inflows from existing projects providing additional financial strength. The growth investment strategy is geographically focused, with 60% allocated to Singapore, 30% to China and Japan, and 10% to other markets across residential, commercial, hospitality and living sectors. Outlook The strategic review establishes four key financial targets that define CDL's trajectory through FY29. The company aims to achieve a dividend payout of at least 35% of reported profit after tax and minority interests annually, whilst reducing net gearing from 75% as at 1H26 to 55% by FY29. The divestment programme targeting over S$1 billion of profit realisation, combined with the doubling of assets under management, positions the company for enhanced capital efficiency and sustainable growth. Recommendation & Target Price Phillip Securities Research maintains a BUY recommendation with an unchanged RNAV target price of S$11.32, representing a 25% discount to the RNAV of S$15.09. No changes have been made to existing forecasts following the strategic review announcement. 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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