Investing In Overseas Markets With Your CPF?

Picture generated by Meta AI

Imagine investing in Apple shares using your CPF Investment Account (CPF-IA).

Sounds too good to be true? It is, to a certain extent.

Due to strict CPF-OA (Ordinary Account) rules allowing only certain locally listed shares, it is almost impossible to use these funds to invest in major US large cap stocks. While direct ownership is unavailable, indirect investment is possible through unit trusts (UTs) or investment-linked insurance policy (ILP) funds, which may include foreign securities like Apple depending on the funds’ investment mandate.

UTs and ILPs are categorised as Professionally Managed Products (PMP) under the CPF investment scheme, and they have a higher threshold for allowed CPF-OA investible funds compared to shares and gold.

While I shall not touch on the insurance component of ILPs as they are individualised products, their funds within share similar properties to that of UT’s. A common gripe about UTs is the deemed higher expense ratios vis-à-vis their exchange traded fund counterparts. However, in view of the CPF-OA investing rules, the choice of investment vehicles available, and the higher PMP investible limit, UTs are probably the main way to go if one wants to go beyond the 35% stock and 10% gold limits. 

Before going along this path, one needs to consider a few points before putting his/her CPF-OA to work. I had written two blogposts (here and here) to assist in the decision.

Disclosure

The Bedokian is vested in Apple, and invested in unit trusts via a robo-advisor with CPF-OA funds.

Disclaimer

The Japanese Market: Hai? Iie?*

*Yes? No?

It was once an economic powerhouse second only to the United States, and its companies, products and technological innovations ruled the international business community and attracted a huge consumer base. 

Picture generated by Meta AI

However, after a series of events brought about by policy and economic factors, a drastic crash of its markets and economy resulted, and deflation and stagflation kicked in, marking the beginning of the so-called Lost Decade in the early 1990s. Later, the term had been pluralized to include the decades of 2000s and 2010s (i.e., Lost Decades). The extension of the lost years was due to the subsequent natural and market disasters such as the Global Financial Crisis in 2008, the Tohoku earthquake of 2011, and the COVID19 pandemic in 2020, not to mention the rise of the Chinese economy and competition.

In late 2023, the Nikkei 225 index, one of the two indices used as barometers of the Japanese equities market, began its surge to recovery, and by around February 2024 had gone to its all-time high, surpassing the level last reached in December 1989. In recent times, there were calls by institutions to invest in Japan, and Buffett’s company Berkshire Hathaway had made inroads into the five largest trading houses, which are diversified companies with huge horizontal and vertical industries and services.

On the economic front using the gross domestic product (GDP) growth rate, between Q4 2023 (coinciding with the beginning of the Nikkei 225 recovery) and Q2 2025, five of the seven quarters were positive, ranging between -0.5% (Q1 2024) and +0.7% (Q2 2024)¹. 

However…

Core inflation figures went to at least 2% every month year-on-year since Apr 2022², and while such figures were considered normal in most developed countries, for Japan, after experiencing periods of low or negative inflation, this was a rude shock, especially when real earnings including bonuses were mostly in the minus region during the same period³. Whilst the government tried to arrest the issue of inflation by raising interest rates, the sharp spike from 0.1% to 0.25%⁴ in end Jul 2024 caused a brief global market crash in early Aug 2024 (dubbed the “unwinding of the Yen carry trade”).

On top of GDP and inflation, two others longer termed “elephants in the room” are the oft-mentioned decreasing population demographics and the threat of a large earthquake (and accompanying tsunami) within the next 30 years. With so much not-so-good factors and news happening, is it still a compelling market to enter?

The Bedokian’s Take

Currently Japan is ranked fourth globally in nominal GDP on an individual country basis, below the United States, China and Germany respectively, but it is forecasted that their position would slip to fifth by the end of this year with India overtaking them. Despite having more negative than positive factors highlighted above, the silver lining is to capitalise on the weaknesses themselves. For instance, the rapid greying population favours healthcare and its related sectors and industries (e.g. medical technology components, geriatric equipment, etc.). Automation, where Japan was at the forefront before their Lost Decades, sees further runway ahead with its major role in addressing the dwindling labour population.

A weakened yen, though sounded like bad news for Japanese tourists wanting to travel overseas, is a good one from the country’s point of view in terms of the price competitiveness of its exports. In turn, this would bring about an increase in export-oriented domestic production and manufacturing (and incoming tourist dollars, too).

Learning Points

Looking at the macroeconomics of a country constituted part of The Bedokian Portfolio’s economic conditions layer for fundamental analysis⁵. Numbers like GDP, interest rates, inflation rates, etc. are publicly available from many sources and they tell an economy’s health and performance. While these macro variables are beyond one’s control, it is good practice to take them in for thought while carrying out one’s investment analysis.

Disclaimer

1 – Japan GDP Growth Rate. Trading Economics. https://tradingeconomics.com/japan/gdp-growth (accessed 16 Aug 2025)

2 – Japan Core Inflation Rate. Trading Economics. https://tradingeconomics.com/japan/core-inflation-rate(accessed 16 Aug 2025)

3 – Japan Real Cash Earnings YoY. Trading Economics. https://tradingeconomics.com/japan/real-earnings-including-bonuses (accessed 16 Aug 2025)

4 – Japan Interest Rate. Trading Economics. https://tradingeconomics.com/japan/interest-rate (accessed 16 Aug 2025)

5 – The Bedokian Portfolio (2^nd ed), p91-93

A Relook At The Four U.S. Counters

Back in 2014 (read here), I had researched and concluded on four U.S. counters which were relatively suitable for newbie and seasoned investors thinking of stepping into the U.S. markets for the very first time: the SPDR S&P 500 ETF (SPY), Berkshire Hathaway Class B (BRK.B), Apple (AAPL) and Alphabet (GOOG/GOOGL, which I would use GOOGL for this post). These were selected based on two points: representation of the U.S. markets in general (SPY and BRK.B) and being proxies for the technological and innovation might of the United States (AAPL and GOOGL).

(Picture credit: rabbimichoel from pixabay.com)

 

A casual dinner conversation with a relative had brought up the question of their current relevance and a decade down the road. The concerns brought up included issues such as the catchup on artificial intelligence (AI) (AAPL), large language models (LLMs) displacing search engines (GOOGL), the changing of the guard (BRK.B) and the possible decline of U.S. exceptionalism (SPY). 

It is valid to have such concerns, as recent narratives were going on about these issues, too. I will briefly go through each of these counters and my thoughts on them for the future.

S&P 500 (via SPY ETF)

While there are a few ways to view the United States market, I use the S&P 500 as the proxy mainly due to the diversification of sectors and companies. Never mind the huge make-up and hard carry by the Magnificent 7 (or 6, depending on how one views them), it reflects the microcosm of the overall U.S. economy.

The direction of the trade policies and geopolitical decisions pursued by the current administration had led to observers and analysts to believe that it could result in the alienation of the U.S. (including the shrinking reserve currency status of the U.S. Dollar), and subsequently the gradual loss of American exceptionalism. However, the U.S. is still a nexus encompassing the various stages of the economy, for their companies hold substantial control of the primary (extraction of raw materials), secondary (manufacturing) and tertiary (services and knowledge based), not necessarily occurring within its territories.

To add, I had presented my case for the above points (see here) and my conclusion is that the U.S. is still investible for now.

Berkshire Hathaway (via BRK.B)

BRK.B is the other proxy for the U.S. economy as not only it has listed companies in its portfolio, but also non-listed ones which represents the heart of American enterprise. The focus, however, is not on this aspect, but another: the transition.

BRK.B is synonymous with the two investing greats: Warren Buffett and the late Charlie Munger, and it had been so for the last five decades. With the announcement by Buffett stepping down at the end of 2025 and handing over the reins to his successor Greg Abel, the main issue would be whether the successor is able to follow and fill the shoes of the predecessors.

As I had mentioned here and here, there may be some deviations in investment methodology and decision-making process that is expected when someone new takes over. I would be observing BRK.B for a few years after the handover is complete.

Apple (AAPL)

News about AAPL’s catch-up on artificial intelligence (AI) has been going around, so much so that they were often compared to the person left behind on the pier while the proverbial AI ship with everyone else on board (e.g. Microsoft, Amazon, etc.) had sailed away. Tim Cook, AAPL’s chief executive officer, had just gave a speech rallying staff to go all-out on AI and make up for lost ground in the field.

Despite pessimism about AAPL’s not-so-wow-factor products and the not-so-impressive growth rate shown in the previous quarters, the last quarter results gave some signs of improvement, beating estimates in revenue, earnings per share, iPhone revenue and Mac revenue, the latter two’s margins not seen since Dec 2021. Whilst figures were not provided, AAPL had reported their installed base of active users had reached an all-time high.

With a growing user base in spite of being a laggard in AI features, I opine that AAPL is light years from being declared obsolete. They are primarily a hardware and services company, and they could possibly look for (and acquire) external sources for AI capabilities rather than develop in-house as what others had done.

Alphabet (via GOOGL)

For a moment GOOGL was written off as a “has-been” with the prediction of LLMs eating GOOGL’s lunch in the search space, which did not happen very much yet. Instead, they adapted and upped the ante by placing their Gemini LLM in the search results, thus showing both search and LLM as complimentary, rather than the latter being a substitute. 

Also, GOOGL is more than just search, and they have other business segments like Google Cloud and YouTube. The Google Cloud revenue had gone up 32% year-on-year in the last quarter, which is expected as the trend for cloud storage is increasing, partially attributed to the voracious appetite for AI applications in which LLMs are included. YouTube is seen by many as the competitor to Netflix, who themselves had beaten other streaming services like Walt Disney and Amazon.

GOOGL is considered to be one of the undervalued counters among the Magnificent 7 or 6, so business wise and share price wise, they may have more runway to go.

Conclusion

Slightly more than ten years had passed since my conclusion back in 2014 on the four counters, and my take is that they are still relevant for minimally the next decade, barring any catastrophic or black swan events happening. Due diligence and further analysis are necessary before entering as my interpretations of the four may be different from yours. Past performance is not indicative of future results, and we can only “guesstimate” what may happen in the years to come based on available data and information.

Disclosure

The Bedokian is vested in SPY, BRK.B, AAPL and GOOGL.

Disclaimer

Astrea 9 Private Equity Bonds

Azalea Asset Management, which is indirectly owned by Temasek Holdings, is issuing the Astrea 9 private equity (PE) bond on 8 Aug 2025. This bond will be listed on the Singapore Exchange, joining the earlier issued Astrea VI, Astrea 7 and Astrea 8 bonds.

There are three bond classes in the Astrea 9 series, with two classes (A-1 and A-2) available for retail investors. Figure 1 provides a brief of the two.

 

Fig.1: Information of the Astrea 9 A-1 and A-2 bond classes. Screenshot from Azalea website.

The Astrea 9 Transaction Portfolio, from which it derives the cash flow for the bonds, is made up of 40 PE funds managed by 31 General Partners and across 1,086 investee companies. These investee companies are diversified across:

• Sectors (31% in information technology, 21% in industrials, 15% in health care, and the rest across other sectors such as financials, communication services, etc.)

• Geographically (66% in the United States, 26% in Europe and 8% in Asia)

• Fund Age (between three and eight years, with the five-year and six-year making up 52%)

As seen in Figure 2, A-1 and A-2 bondholders are relatively high up in the receipt of distributions (Clause 5). 

 

Fig. 2: Astrea 9 cash flow and priority of payments. Screenshot from Azalea website.

The Rates

The annual interest rates (or coupon rates) for A-1 and A-2 are 3.4% and 5.7% respectively. Like the previous Astrea bonds, the rate for US$ denominated bonds are higher to compensate for the forex risk vis-à-vis against the S$. With the US$ depreciating against S$ by around 5.8% for the past five years, and we do not know how the US$-S$ forex rate would be, it is usually prudent to stick to local currency for fixed income instruments.

Perhaps the major consideration of investing in corporate bonds would be comparing with the (relatively) risk-free rate of Singapore government bond yields for the same duration. With the Astrea 9 bonds having the earliest callable date in five years and the maturity date 15 years later, and using the current Singapore government 5-year and 15-year bond yields at 1.8%¹ and 2.21%² respectively, the 5-year risk premium is 1.6% (3.4 – 1.8) while the 15-year risk premium is 2.19% (3.4 + 1 (step-up) – 2.21).

The Bedokian’s Take

The Bedokian Portfolio’s bond selection entails the bond to be at least of investment grade and five years to maturity³, to which both A-1 and A-2 met the mark. 

The low risk premium may be slightly uncomfortable for some conservative investors, since there is a very remote chance of the bond defaulting on the coupon payments and principal. So far, the retail tranches of past and current Astrea bonds (IV, V, VI, 7 and 8) have/had paid regular coupons on time, with no impairment of the principal.

With Singapore Savings Bond and bank fixed deposit rates going down, many investors may go for this as the next deemed “fixed deposit”, though I would caution it is still a listed instrument subjected to price and market volatility.

The offer period for the bond is from now till 1200 hrs, 6 Aug 2025.

Disclaimer

Reference

Astrea 9 Bond Prospectus - https://www.azalea.com.sg/sites/default/files/2025-08/astrea-9-pte-ltd-prospectus-30-july-2025.pdf 

1 – Singapore 5 Year Bond Yield. Trading Economics. 1 Aug 2025. https://tradingeconomics.com/singapore/5-year-bond-yield

2 – Singapore 15 Year Bond Yield. Trading Economics. 1 Aug 2025. https://tradingeconomics.com/singapore/15-year-bond-yield

3 – The Bedokian Portfolio (2^nd ed), p108.

Nine Years…

Today marks the ninth year of The Bedokian Portfolio blog. For this anniversary post, I will touch on our definition of retirement and some updates on our Bedokian Portfolio.

Picture generated by Meta AI

Definition Of Retirement

Most people reach a stage in their professional lives known as retirement, which is typically defined as leaving one's job and ceasing regular employment. Many view retirement as an opportunity to step away from work routines and spend time differently. However, some may encounter challenges such as difficulty adjusting to new daily structures or uncertainty about how to spend their time, potentially due to a lack of post-retirement planning.

Our definition of retirement consists of two parts: reaching financial independence so that employment income is not required as the main source of funds, and gaining the flexibility to engage in preferred activities, including continued work if desired. For the first part, achieving financial independence often involves alternative sources of cash flow, such as investment portfolios or income-generating assets. The second part is qualitative and it relates to identifying personal goals and experiences previously unattainable due to work commitments.

Continuing to work after retirement remains an option, either for supplementary income or personal fulfillment, but one may choose to leave or change jobs if existing roles become physically or mentally demanding. The objective is to enable a fulfilling post-retirement life distinct from prior work routines. If continued employment is motivated solely by financial necessity or there is no structured plan for retirement activities, then one may not be fully prepared for this phase.

Our Bedokian Portfolio So Far

Despite geopolitical tensions and economic uncertainties, the bull run in the U.S. and our local markets continued, and these greatly contributed to our Bedokian Portfolio (and other portfolios in our Portfolio Multiverse, too). Our Bedokian Portfolio value as of 26 July is just around 8% shy of our 2028 year-end target, around three and a half years later.

As shared in this post we used an annual return of 4% for projection, which I guess for most people is conservative. We would prefer to stick to this number as it acts as a buffer should our portfolio value heads south in later years, and if the portfolio size grows more than expected, the plus point is that we may consider an earlier step-down point.

Cheers to all!

The Rise Of The Singapore Dollar

  

(Picture credit: PublicDomainPictures from pixabay.com)

If you had heard from those around you that travelling to some places were getting “cheaper”, they were right. This is mainly due to the strengthening of our Singapore Dollar (SGD) against other major currencies, as shown in Figure 1 over the past 5 years:

SGD to	1-Year %	2-Year %	5-Year %
United States Dollar	+5.34	+3.84	+8.66
Euro	-2.36%	-1.03	+5.15
British Pound	+0.31	-0.03	+1.64
Japanese Yen	-3.95	+10.62	+49.76
Australian Dollar	+8.20	+7.33	+14.91
Chinese Yuan	+3.81	+3.78	+11.27

 

Fig.1: Singapore Dollar to major currency pairs, 1-year, 2-year and 5-year gain/loss. Period covered 13 Jul 2020 to 11 Jul 2025 as at around 11 Jul 2025 2255hr Singapore Time. Source: XE.com. 

While Singaporeans going abroad would literally get more bang for the buck in terms of exchange rates, looking from the other side, if one is having assets in, for instance, Japan, assume the holdings’ prices remain unchanged, the loss would be around 33% over five years.

This is what investors refer to as foreign exchange, or forex, risk. It works both ways in the overall scheme of things; when the country’s currency is strengthened over a period, its imports become cheaper, but its exports would be getting more expensive for the other side, ceteris paribus.

There are many reasons why a certain currency is appreciating and/or depreciating against other currencies. The major ones would be inflation rate, interest rates, macroeconomics (balance of trade, public debts, etc.), geopolitics and demand-supply for the currencies. Factoring in these reasons into the -33% example above, there might be a variety of results, with the possibility of returns going into positive territory.

Forex risk looks daunting, but if the asset returns (capital gains and income) outpace it, the risk should not be a major issue. Though the United States Dollar (USD) may have lost around 8% over five years, the S&P 500 had gained close to 97% in the same period, making forex risk looked like a small blimp. 

Similarly, taking the Euro, which lost around 4.8% against the SGD for half a decade, the representative index STOXX Europe 600 rose by 49%. Surprisingly, Japan, which suffered the 33% forex loss mentioned above, had returned almost 76% based on the Nikkei 225 index. 

Back to the topic of strong SGD, this might be an opportune time to enter markets whose currencies had weakened and accumulate financially sound companies. 

Related post

Going Local, Global or Glocal

All figures quoted were from Google Finance and XE.com.

The Most Important Moment In A Buy/Sell…

 …is to press the button. Period.

Picture generated by Meta AI

Sure, pressing buttons are easy, whether the physical ones on your keyboard, the tactile touchscreen of your smartphone or on the computer monitor assisted through a mouse click, we all had done it before.

However, it is the weight of responsibility or consequence that comes with the pressing of the button that makes this seemingly harmless activity a not-so-simple endeavour. Imagine sending an important email that may make or break one’s career, or on a more serious note, the big red button to launch nuclear weapons (as far as I saw from some entertainment channels on how it works).

Or, more relevantly, your decision to whether to buy or sell a counter for your investment portfolio.

I believe a lot of thoughts, considerations and analyses had been factored in before the buy/sell call was made, but the final act before the actualisation of the transaction would be conviction. Advice, opinions, views and recommendations could come from anywhere and anyone, but conviction should come from the decision maker himself/herself.

Yet, it is this final step of conviction that is filled with doubts, anxieties and worst case, fear. A lot of “what-ifs” happens at this stage, which is akin to a high wall between the penultimate and the last steps of a staircase. Still, a decision must be made, whether one likes it or not, for the individual’s investment journey must go on and the markets wait for no one. Looking back, if a good call is made, well done, but if a bad call is made, learn from it.

Like the journey of life, these ups and downs are lessons for us to be better investors.

All About Price: The Price Ratios

This is part of my intermittent series on price, one of the most important and commonly encounters considerations in investing and trading. For this post, I will discuss about the various financial ratios that has price as a component.

Picture generated by Meta AI

There are five main types of ratios with price as a major component, which I let Gemini AI handle the descriptions (output displayed in a different font):

1. Price-to-Earnings (P/E) Ratio:

• Formula: Market Price per Share / Earnings Per Share (EPS) 
• Interpretation: A higher P/E ratio suggests that investors are willing to pay more for each unit of earnings, potentially indicating overvaluation or high growth expectations. A lower P/E ratio may suggest undervaluation or lower growth expectations. 
• Example: If a company's stock price is $50 and its EPS is $5, the P/E ratio is 10 (50/5). 

2. Price-to-Book (P/B) Ratio:

• Formula: Market Price per Share / Book Value per Share
• Interpretation: Compares the market price of a stock to its book value (assets minus liabilities). A P/B ratio above 1 suggests the market values the company higher than its net asset value.
• Example: If a company's stock price is $20 and its book value per share is $15, the P/B ratio is 1.33 (20/15). 

3. Price-to-Sales (P/S) Ratio:

• Formula: Market Capitalization / Total Sales (or Price per Share / Sales per Share)
• Interpretation: Indicates how much investors are willing to pay for each dollar of a company's revenue. Lower P/S ratios may suggest undervaluation or that the company is not effectively utilizing its sales.
• Example: If a company's market capitalization is $100 million and its total sales are $50 million, the P/S ratio is 2 (100/50). 

4. Price-to-Cash Flow (P/CF) Ratio:

• Formula: Market Price per Share / Cash Flow per Share
• Interpretation: Measures how much investors are willing to pay for each dollar of a company's cash flow. It can be a more reliable indicator than P/E ratio because cash flow is harder to manipulate than earnings.
• Example: If a company's stock price is $60 and its cash flow per share is $10, the P/CF ratio is 6 (60/10). 

5. Price-to-Earnings-to-Growth (PEG) Ratio:

• Formula: P/E Ratio / Expected Earnings Growth Rate
• Interpretation: Helps to assess whether a stock's P/E ratio is justified by its future earnings growth. A PEG ratio less than 1 is generally considered favorable, suggesting the stock may be undervalued relative to its growth potential.
• Example: If a company's P/E ratio is 20 and its expected earnings growth rate is 25%, the PEG ratio is 0.8 (20/25). 

 

These ratios are usually available from most stock screener sites, or one could calculate the numbers based from the stock market prices and financial statements.

Generally, the lower these ratios are, the better the company’s valuation is, ceteris paribus, though a whole lot of relativity and context are needed in an actual analysis. They should be utilized as a guideline, not as a major dealbreaker when selecting companies to invest in.

The All-In-One Price Ratio

Conversely, during my specialist diploma course days (read here for more details about my view and experience of the course), a lecturer had briefly spoke about using the various price ratios and aggregate them to a score, which I dubbed it as the “all-in-one price ratio”. While I did not get more details on this other than a short mention, perhaps this may be my next side project in deriving “the number”.

Check out the other post in my All About Price series.

All About Price: Introduction & Valuation of Value 

All About Price: Buyer/Seller Remorse and Premorse

All About Price: The 52-Week High/Low

All About Price: Reversion To The Mean

All About Price: Bottom Fishing

All About Price: The (Price) Margin Of Safety

Inside the Bedokian’s Portfolio: ASML

Inside the Bedokian’s Portfolio is an intermittent series where I will reveal what is actually inside our investment portfolio, one company/bond/REIT/ETF at a time. In each post I will talk a bit about the counter, why I had selected it and what lies ahead in the future.

For today’s counter, I had only just added it last week and that is Advanced Semiconductor Materials Lithography Holding N.V., better known as its shortened name ASML.

Partial screenshot of ASML 2023 Annual Report cover. Source: ASML

A Global Player

ASML was founded in the 1980s as a joint venture between two Dutch companies, one of which was the famous electronics company Philips. It makes photolithography machines that are crucial for the manufacture of integrated circuits, or chips/microchips in everyday speak. 

The past decade had seen ASML’s rise with pioneering technology such as the extreme ultraviolet lithography (EUV) process, which allowed smaller process nodes and subsequently more compact chips to be made. The ongoing artificial intelligence (AI) revolution had provided a critical supporting role for ASML in the whole scheme of things. 

A Holistic Analysis Approach

Granted that there were (and still are) many stock analysts, financial news channels, and investing and trading social media sites talking about ASML, it would be difficult not to be tempted to jump onto the bandwagon of like-minded ASML bulls. Thus, a degree of fundamental analysis was required before convincing ourselves to be vested.

Figure 1 shows selected financial line items for review, in particular revenue, net income, current and long-term debt, and free cash flow from 2022 to present.

Selected Financial Line Items (EUR, in millions)	Periods
	Trailing 12 Months	31 Dec 2024	31 Dec 2023	31 Dec 2022
Revenue	30,714.4	28,262.9	27,558.5	21,173.4
Net Income	8,702.8	7,571.6	7,839.0	5,624.2
Total Debt (current debt + long-term debt)	4,687.6	4,631.6	4,260.4	4,584.1
Free Cash Flow	9,283.7	9,083.1	3,247.2	7,167.5

 

Fig.1: Selected financial line items of ASML. Source: Yahoo Finance (as of 21 June 2025)

While revenue was increasing and total debt was kept around the same level, some of the small kinks encountered were the slight undulating net income and the large drop of free cash flow in 2023, the latter of which caused by a net effect of a larger amount of contract liabilities over contract assets. While the term “liabilities” may invoke some concerns, it is basically accounting treatment of payments and recognition of revenue.

As ASML is viewed as a growth counter, I used the growth investing selection guideline from the eBook¹ and apply to it, though I also threw in price-to-earnings ratio for an overall picture (see Figure 2).

Equity Selection Guideline	ASML
Price-to-Earnings (P/E) Ratio being the 25% lowest amongst other companies within the same sector/industry	ASML’s forward P/E of 27.55 is higher than industry average of 25.91
Price/Earnings-to-Growth Ratio of 1 and below	1.44 (5-year expected)
Operating Margin percentage being top 50% among other companies within the same sector/industry	ASML’s operating margin of 35.37% is in the top 50% among the same industry, whose average is 4.27%
Return on Equity (ROE) percentage being average among other companies within the same sector/industry	ASML’s ROE is 55.62%, above industry average of 11%
Positive free cash flow for at least the past three years	Positive as shown in Figure 1
Gearing ratio (Debt/Equity) is constant or reducing for the past three years	0.21 (up to Mar 2025) 0.27 (2024) 0.37 (2023) 0.53 (2022) Signs of reduction

 

Fig.2: Selected financial ratios and percentages of ASML. Sources: Yahoo Finance, Zacks, Gurufocus.com and Stockanalysis.com (as of 21 June 2025)

Though some of the ratios did not fit into the selection guidelines, such as PEG ratio > 1, and not being the average ROE percentage across the industry, certain liberties and discretions were taken to further the decision to go ahead with the investment; these are guidelines for conservative growth companies (stated in the eBook), and after all, most importantly, they are guidelines, i.e., not rules set in stone.

Another aspect that I want to bring in is the comparative figures used, like the industrial averages and P/E utilized, are sort of a red herring. The truest form of comparison is to find another company or sector/industry that matches closely to what ASML does, a not-so-easy task given that its closest competitors Canon and Nikon are conglomerates and their photolithography is just part of their overall operations.

This brings us to the next level of fundamental analysis after financial statements: environmental factors. ASML is a major player in the photolithography business commanding an estimated 90% of the global market share according to some sources, and its EUV process gave it a huge advantage over its other competitors. In gist, it is a near monopoly of its field. This is the major dealbreaker, plus its solid financial fundamentals, to make the buy call.

The Future 

The biggest concern on the future profitability of ASML is its role in the whole geopolitical arena. The United States government had pressured ASML via the Dutch government to restrict some of their latest photolithography machines for export to China, from where it derived 41% of its revenue for financial year 2024. This may be slightly compensated with the demand for semiconductors in other parts of the world, fuelled by the need for smaller chips with faster processing, and not forgetting the burgeoning world of AI.

Disclosure

Bought ASML at:

USD 747.00 at June 2025

Disclaimer

1 – The Bedokian Portfolio (2^nd ed), p151-153