SCI SP
Alinta transforms the earnings base, renewables scale continues, but near-term margins face a reset
KEY INSIGHTS #1
Alinta creates a second core market and materially expands the earnings platform. Sembcorp completed its acquisition of Alinta Energy on 11 June 2026.
Alinta adds 3.4GW of operating capacity, approximately 1.1 million Australian customers and a 10.4GW development pipeline, establishing Australia as Sembcorp’s second major energy market after Singapore. The transaction was completed at an enterprise value of A$6.5B, equivalent to about 6.6x trailing adjusted EBITDA. Management’s transaction analysis indicated that the acquisition would have increased pro-forma FY2024 EPS by approximately 9%, although the actual outcome will depend on refinancing costs, integration and Australian power-market conditions. No equity fundraising was required.
KEY INSIGHTS #2
Singapore gas remains the cash engine, but 2026 margin pressure is already understood.
Gas and related services generated S$701M of underlying net profit in FY2025, representing the majority of group earnings. The segment remains valuable because it provides recurring cash flow to fund renewables development and support dividends. However, management has warned that newly contracted Singapore gas volumes will face lower margins in 2026 as gas prices and generation spreads normalise. FY2025 gas earnings already declined 4%, reflecting weaker UK performance and narrower Singapore spreads.
CSSC SP
Record volumes, captive MBT cost advantage, and net cash covering two-thirds of market value
KEY INSIGHTS #1
Tyre production and replacement demand support continued volume growth.
China Sunsine sold a record 222,243 tonnes of rubber chemicals in FY2025, up 4% YoY, despite intense price competition. Insoluble sulphur was the strongest category, with volume rising 14%, while international volume increased 5% as Chinese tyre manufacturers expanded production in Southeast Asia. The group supplies more than three-quarters of the global top 75 tyre makers, giving it broad exposure to both original-equipment and replacement-tyre demand.
KEY INSIGHTS #2
The balance sheet provides an unusually strong valuation floor.
China Sunsine ended FY2025 with RMB2.33B of cash, no bank borrowings and net cash equivalent to approximately S$0.45 per share. At a share price around S$0.67–0.68, cash represents roughly two-thirds of the market value. The company also adopted a policy to distribute at least 40% of adjusted net profit for FY2025 and FY2026, improving the likelihood that excess cash reaches shareholders.
1347 HK
Mature-node recovery, Huali 7nm optionality, but export controls raise execution risk
KEY INSIGHTS #1
Foundry recovery is translating into higher utilisation, ASP and margins.
Hua Hong’s 1Q26 revenue increased 22.2% YoY to US$660.9M, supported by higher wafer shipments and improved average selling prices. Gross margin expanded by 3.8 percentage points to 13.0%, demonstrating operating leverage as production lines remain highly utilised. Management guided 2Q26 revenue to approximately US$690M–700M and gross margin to 14%–16%. The sequential margin improvement is the most important near-term fundamental signal: fixed-cost absorption is improving, while pricing and product mix are becoming less adverse.
KEY INSIGHTS #2
Capital raise funds the roadmap, but creates near-term supply pressure.
Iluvatar is raising about HK$7.07B via a new H-share sale at HK$476 per share, a 15% discount to its prior close, with proceeds for R&D, product iteration and technology upgrades. Strategically, that is positive because AI chips are capital intensive and product cycles are unforgiving. Tactically, it creates overhang because the placement resets the near-term reference price and adds supply after a sharp post-IPO rally.
100 HK
M3 product validation, global monetisation, but HK$16B fundraising resets the valuation
KEY INSIGHTS #1
M3 shifts MiniMax toward coding agents and higher-value enterprise workloads.
MiniMax released M3 in June 2026, targeting coding, agentic workflows and long-duration tasks rather than only consumer-facing generative AI. The model supports native image and video inputs and a context window of up to one million tokens. Its proprietary MiniMax Sparse Attention architecture is designed to lower the computational burden of long-context inference. This is commercially important because coding and enterprise-agent workloads generally provide clearer usage-based monetisation than consumer AI applications alone.
KEY INSIGHTS #2
Revenue growth and international traction are strong, but monetisation remains early.
FY2025 revenue increased 158.9% to US$79.0M, with more than 70% generated outside China. Revenue growth was supported by both AI-native applications and the company’s open-platform and enterprise-services business. Gross profit increased more than fivefold to US$20.1M, while gross margin improved from 12.2% to 25.4%, reflecting better model efficiency and infrastructure allocation. The international mix differentiates MiniMax from China AI peers that depend more heavily on domestic government or enterprise contracts.
JPM US
Defensive core bank with broad-based earnings resilience
KEY INSIGHTS #1
Higher NII and active capital markets support bank earnings.
JPMorgan remains a core beneficiary of a constructive U.S. banking environment, supported by resilient net interest income, stronger investment-banking activity and elevated trading volumes. While current capital-markets conditions may normalise in 2H26, the bank’s diversified revenue base across consumer banking, markets, investment banking and wealth management provides more defensive earnings support than peers that rely more heavily on trading or deal activity.
KEY INSIGHTS #2
Diversified franchise and credit resilience support shareholder returns.
JPMorgan’s scale, capital strength and asset quality make it suitable as a defensive core holding among U.S. banks. Management raised FY26 net interest income guidance to around US$105.5bn and lowered its Card Services net charge-off outlook to approximately 3.4%-3.6%, reflecting better-than-expected interest income and consumer credit performance. The bank also continued to return capital through dividends and buybacks, distributing roughly US$10bn in 2Q26 alone, supported by strong profitability and a solid CET1 ratio of around 15%.
META US
Expanding from AI-enhanced advertising into a broader AI platform
KEY INSIGHTS #1
Meta is opening new AI monetisation channels beyond advertising.
Meta’s AI strategy is broadening from improving recommendations and ad targeting into directly monetising proprietary models. Muse Image is being embedded across Meta AI, Instagram and WhatsApp, with future access for advertisers to create marketing materials, while Muse Spark 1.1 introduces paid API access for coding and agentic tasks. Meta’s large consumer distribution gives it an advantage in rapidly deploying these products across billions of users, creators and businesses.
KEY INSIGHTS #2
Infrastructure and custom silicon support the shift toward scaled AI deployment.
As consumer and enterprise AI move from experimentation to production, Meta is building the computing capacity needed to compete with leading AI platforms. Its planned C$13bn Alberta data centre will begin at 1GW and can scale to 1.8GW, while its in-house Iris AI chip is expected to enter production and reduce dependence on Nvidia and AMD. This gives Meta greater control over long-term AI costs and capacity, although delays in agent development show that execution remains a key risk.
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