Toh estimates SIF will enjoy loan growth of 5% y-o-y in the current FY2026, bringing its total book to $2.93 billion.
He believes that SIF, by targeting underserved, relationship-driven segments, can sustain more resilient and structurally higher NIMs than larger peers. In FY2025, SIF's NIM reached 2.27%, vs the peer average of 1.94%.
This current FY2026, Toh expects SIF's NIM to hold at 2.22%, with potential upside from fewer Fed rate cuts amid inflation pressures.
On the other hand, SIF has a stable, predictable deposit base given how over 80% of it comes from fixed deposits. "This offers both sticky and competitive funding costs while reducing reliance on wholesale markets," says Toh, who estimates that SIF will maintain at least a 2.2% cost of funding this year.
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Despite the riskier macro environment, SIF is maintaining what Toh dubs "best-in-class" asset quality base, with FY2025 NPL ratios at just 0.4%, thanks to a conservative loan portfolio and prudent risk management, which has booked $4.5 million in precautionary provisions and an 80% NPL coverage.
Despite this, SIF is trading at just 0.75x FY2026 P/B with an NAV per share of $2.10, implying a 36% unwarranted discount that does not reflect its consistent profitability and resilient asset quality.
Toh's target price is based on 0.95x of SIF's FY2026 book value.
As at 10.34 am, Sing Investments & Finance gained 1.27% to change hands at $1.59.
