Among Singapore's retail investors, there's an enduring debate about investment strategy. While DBS and Singapore Exchange draw approval as solid, defensive holdings, there's always a counterargument that meaningful wealth requires venturing into more volatile territory. This tension between safety and risk-taking captures something essential about a segment of the local investing culture. Understanding these high-risk positions requires looking beyond the numbers to grasp why investors might be attracted to them despite the obvious dangers.
Consider DFI Retail Group, which operates Guardian pharmacies and 7-Eleven convenience stores across Asia. The company made headlines in March 2025 when it announced the sale of its entire Singapore supermarket business - including all 48 Cold Storage and 41 Giant outlets - to Malaysian retail group Macrovalue for $125 million. The transaction, expected to close in the second half of 2025, represents a fundamental strategic pivot as DFI sheds its struggling food retail operations to focus on its more profitable health and beauty and convenience segments.
Yet beneath this strategic clarity lurks a debt-to-equity ratio of 447.2, a figure so astronomical it makes even seasoned analysts wince. For every dollar of shareholder equity, the company carries more than four dollars of debt. The company is losing money, with negative returns on equity, yet still commands a market capitalization of over five billion US dollars. Its stock price has been climbing steadily, from two dollars at its 52-week low to four dollars in mid-December, a doubling that has rewarded those who bought at the bottom.
The telecommunications sector offers its own cautionary tale through Singtel. With its debt-to-equity ratio of 41.8, Singtel isn't in the stratospheric danger zone of DFI Retail, but it carries enough leverage to make conservative investors uncomfortable. What makes Singtel's situation particularly noteworthy is how it represents a certain kind of Singapore corporate dream gone awry.
There was a time, not so long ago, when Singtel seemed invincible. It was the company that connected Singapore to the world, that brought the internet to homes across the island, that paid reliable dividends quarter after quarter. Retirees budgeted around those dividend cheques. Financial advisors recommended it as a widow-and-orphan stock, the kind of investment you could buy and forget about. Many who bought shares during the 1993 IPO or shortly thereafter held them for decades, viewing Singtel as a cornerstone holding valued as much for its stability as its returns.
But the world changed. Competition intensified. Younger, nimbler players like Circles.Life began chipping away at market share. The company's ambitious regional expansion, particularly its investments in India's Bharti Airtel and Indonesia's Telkomsel, delivered mixed results. More recently, the company was fined one million dollars by IMDA on December 11 for a voice service disruption in October 2024 that affected 500,000 users and disrupted emergency services for over four hours. While the fine itself is relatively small compared to Singtel's $76 billion market capitalization, it adds to a string of operational challenges including network outages at its Australian subsidiary Optus.
Many long-term holders now face an uncomfortable dilemma: hold onto shares that carry sentimental value and family history, or sell and deploy the capital elsewhere. The mathematics say one thing; emotional attachment whispers another. This conflict between head and heart plays out in countless portfolios, particularly among older Singaporeans who remember when Singtel represented the gold standard of local investing. Interestingly, despite these challenges, the stock has performed well in 2025, up over 50% year-to-date, though it has pulled back from November highs.
Perhaps no company in the STI better embodies pure risk than Sembcorp Industries, with its debt-to-equity ratio of 162.7. The company, which operates in energy and urban development, finds itself at the intersection of multiple challenging trends. The global push toward renewable energy, the volatility of fuel prices, and the capital-intensive nature of its business model create a perfect storm of uncertainty.
What makes Sembcorp fascinating from an investment perspective is how it forces investors to take a view not just on a company, but on the future of energy itself. The company is transitioning from traditional power generation to renewables, a necessary but expensive pivot that requires enormous capital expenditure at precisely the moment when its legacy assets are becoming less valuable. It's a high-wire act performed without a net, and the debt burden makes every misstep potentially catastrophic.
Yet the stock has its believers. Trading at $5.92 with a forward P/E ratio of just 9.574, Sembcorp looks cheap if you believe in its transformation story. The company's return on equity of 19.23% suggests underlying profitability despite the leverage. For investors willing to stomach the volatility, there's a case to be made that Sembcorp represents a leveraged bet on Asia's energy transition, a way to potentially multiply returns if the company successfully navigates its transformation.
The technology sector contributes its own risky proposition through Venture Corporation, though in a different way. With a debt-to-equity ratio of just 0.902, Venture isn't overleveraged in the traditional sense. Instead, its risk comes from the feast-or-famine nature of electronics manufacturing. The company's earnings fell by eight percent recently, and its revenue growth is similarly negative. Yet it trades at a forward P/E of 17.86, suggesting the market believes these troubles are temporary.
Venture's trajectory resonates with anyone who has followed Singapore's manufacturing sector over the decades, watching as production shifted to China, then Vietnam, then wherever labor costs next bottomed out. The company has survived by moving up the value chain, focusing on complex products that require precision and expertise rather than just cheap labor. But this strategy means exposure to the cyclical whims of technology companies, where a single lost contract or delayed product launch can crater quarterly results.
What unites all these risky STI stocks is how they force investors to confront uncomfortable truths about modern investing. The days when you could buy Singapore blue chips and sleep soundly are, if not over, certainly more complicated. Global competition, technological disruption, and the sheer speed of change mean that even established companies with proud histories face existential challenges.
For the average Singaporean investor, these stocks present a philosophical question as much as a financial one. Do you chase the potentially higher returns that come with higher risk, knowing that one wrong move could wipe out years of careful saving? Or do you accept lower returns from safer investments, watching inflation slowly erode your purchasing power while others seemingly get rich quick?
The conventional wisdom suggests a balanced approach: a core portfolio of stable dividend payers, supplemented by carefully chosen higher-risk positions sized small enough that losses won't be catastrophic. It's not sophisticated advice, but it has the virtue of being survivable. In investing, as in life, sometimes surviving is the most sophisticated strategy of all.
The challenge, of course, is knowing which risks are worth taking and which are simply gambles dressed up in annual reports. That distinction, more than any financial ratio or analyst recommendation, is what separates investing from speculation. Looking at the December data, these risky stocks show divergent paths. DFI Retail has been one of the strongest STI performers in 2025, supported by strategic restructuring. Singtel has delivered strong returns despite operational challenges, up over 50% year-to-date even after pulling back from November highs. Sembcorp continues its energy transition journey with mixed results. Venture Corporation faces near-term headwinds primarily from weaker consumer lifestyle demand, though the company is actively gaining market share in other domains like life sciences and data centre equipment, positioning for a potential recovery in late 2025 and into 2026.
Each tells a different story about risk, but all share a common thread: they demand more from investors than just capital. They require conviction, patience, and the emotional fortitude to withstand volatility without panicking. The question facing investors today isn't whether these stocks are risky—the numbers make that abundantly clear. The question is whether the potential rewards justify the very real possibility of permanent capital loss. That calculation depends not just on spreadsheets and financial models, but on each investor's unique circumstances, time horizon, and ability to sleep at night when markets turn volatile.
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