ASSPH SP / TAP.SI
Growth is accelerating; proof now shifts to second-half delivery and return discipline
Alternative Living
Revenue rose 33.9% and management-adjusted NPAT increased 113.3% in 1H26, but gross margin contracted 656bps and the S$2.1m favourable year-on-year swing in net fair-value effects exceeded the S$1.0m increase in reported profit. At the same time, operating scale reached 3,520 keys across 103 assets and the secured two-year pipeline rose to c.2,100 keys from 1,490 in the prior update. Phoenix Park (>700 keys), Habitat (886 beds) and Dabu (80 keys) therefore improve the out-year runway.
Cash increased to S$11.5m after the IPO and current liquidity turned positive, reducing immediate funding pressure. However, S$8.5m of lease principal and interest exceeded S$7.7m of CFO, while lease liabilities rose 9.1% to S$65.6m, so headline cash generation continues to overstate the residual cash available after property obligations. The unchanged FY26F model requires S$27.4m of 2H26 revenue and S$8.5m of PATMI—64% and 79% of the full-year totals. On-time openings, a recovery in gross margin and evidence that new sites earn an adequate cash return after leases are therefore the next proof points for the investment case.
We maintain our OUTPERFORM rating and lower our target price slightly to S$0.348 (after factoring in share dilution), based on a DCF using a 9.0% WACC and 3.0x terminal EV/EBITDA. The target implies c.51.5% upside.
Pipeline delays or slower stabilisation; failure to recover gross margin; lease obligations and related-party exposure growing faster than cash earnings; funding or guarantee calls at JVs; Level 3 fair-value volatility; and limited asset-level disclosure.
