KEP SP
Bifrost locks in digital recurring income, fund-management flywheel accelerates, but valuation requires delivery
KEY INSIGHTS #1
Bifrost turns connectivity investment into contracted, long-duration income.
Keppel has secured customers for all five fibre pairs on the Bifrost subsea cable system. The contracts have an estimated aggregate value of US$1.3B, or about S$1.7B, including capacity commitments and cable operations and maintenance income over approximately 25 years. This is strategically important because it converts a capital-intensive digital-infrastructure investment into visible contracted cash flow. It also demonstrates Keppel’s model of developing infrastructure, commercialising capacity and subsequently earning operating and management income from the asset.
KEY INSIGHTS #2
The asset-management flywheel is becoming a measurable earnings driver.
Keppel ended FY2025 with S$95B of funds under management, up from S$88B, and remains on track to reach at least S$100B by end-2026. Asset-management net profit rose 15% YoY to S$189M, while asset-management fees increased to S$453M. Momentum continued in 1Q26. Asset-management fees increased 13% YoY to S$108M, and Keppel said it was finalising another approximately S$2B of limited-partner commitments. The key valuation shift is from one-off asset-value recognition toward recurring fee-related earnings. As Keppel raises external capital, it can invest alongside limited partners, earn management and performance fees, operate the assets and eventually recycle them into its listed REITs or private funds.
STM SP
Backlog conversion, FPSO execution, and legacy-risk clean-up
KEY INSIGHTS #1
Offshore capex stays supportive, with FPSOs providing the earnings backbone.
Seatrium is positioned for the continuing deepwater investment cycle, where operators are prioritising large, long-life production assets. Its Petrobras P-84 and P-85 FPSO projects provide substantial multi-year workload through 2029, while the broader order book extends revenue visibility to 2033. The key attraction is not merely higher order intake, but exposure to complex projects where Seatrium has established engineering and fabrication capabilities.
KEY INSIGHTS #2
Legacy risk is declining, allowing investors to focus on operating execution.
The settlement of the Maersk offshore-wind vessel dispute removed a major uncertainty. Maersk agreed to pay the remaining US$360M on the US$475M contract, including US$250M through an interest-bearing credit arrangement, while both parties discontinued legal proceedings. With the vessel approximately 99.8% complete at settlement, this significantly reduces downside from one of Seatrium’s most visible legacy exposures.
0981 HK
AI demand meets mature-node pricing power, but valuation already reflects much of the recovery
KEY INSIGHTS #1
AI and power-management demand are driving a stronger-than-expected pricing cycle.
Unlike previous semiconductor recoveries that relied mainly on higher utilisation, SMIC is now benefiting from higher average selling prices. In 1Q26, revenue reached US$2.51B, up 11.5% YoY, while gross margin improved to 20.1% despite slightly lower wafer shipments, as pricing and product mix improved. Management guided 2Q26 revenue to increase 14–16% QoQ with gross margin expanding to 20–22%, indicating that pricing momentum remains intact.
KEY INSIGHTS #2
Domestic semiconductor substitution remains the structural growth driver.
SMIC remains the largest beneficiary of China’s semiconductor self-sufficiency strategy. Restrictions on advanced semiconductor imports continue to redirect demand toward domestic foundries across automotive MCUs, power management ICs, industrial chips and AI-supporting devices. While SMIC is not competing directly with TSMC at leading-edge nodes, its mature-node portfolio remains strategically important and enjoys strong domestic demand. Recent management commentary suggests demand for AI-supporting power-management products continues to strengthen.
0883 HK
Oil prices provide the macro kicker, but production growth is the structural driver
KEY INSIGHTS #1
Foundry recovery is translating into higher utilisation, ASP and margins.
Brent crude was recently around US$85.6/bbl, providing a favourable near-term earnings backdrop. CNOOC’s realised crude price was already US$75.92/bbl in 1Q26, up 4.5% YoY, helping oil and gas sales rise despite broader concerns over long-term Chinese petroleum demand. The stronger point is volume. CNOOC produced 205.1M boe in 1Q26, up 8.6% YoY, with domestic production rising 7.0% and overseas output increasing 12.3%. This gives CNOOC an earnings buffer that refiners such as Sinopec lack: it benefits directly from higher upstream volumes without being exposed to weak Chinese refining and petrochemical margins.
KEY INSIGHTS #2
Low-cost production keeps the cash engine resilient across the oil cycle.
CNOOC’s operating cost remained broadly flat at US$6.66/boe in 1Q26, although all-in cost increased to US$28.41/boe from US$27.03 due partly to taxes and exchange-rate movements. The cost base remains highly competitive relative to prevailing oil prices, leaving substantial operating cash-flow headroom even under a material crude-price correction. The company is also targeting 780M–800M boe of production in 2026 and 810M–830M boe in 2027. That creates a visible multi-year production growth path rather than relying solely on higher commodity prices for earnings expansion.
UNH US
Integrated healthcare leader positioned for a profitability recovery
KEY INSIGHTS #1
Ageing demographics support demand but favour scaled cost managers.
U.S. healthcare spending rose 7.3% to US$5.7tn in 2025, while Medicare spending is projected to grow around 7.7% annually through 2034 as the population ages. Higher utilisation also raises medical costs, favouring scaled operators such as UnitedHealth that can combine insurance, claims data and healthcare delivery to manage pricing and patient costs more effectively.
KEY INSIGHTS #2
UnitedHealthcare and Optum provide multiple recovery levers.
UnitedHealth’s integrated model is showing early improvement, with 2Q26 operating earnings rising to US$8.0bn from US$5.2bn and its medical care ratio improving to 86.7% from 89.4%. Better pricing discipline and medical-cost management, together with Optum’s healthcare delivery, pharmacy and data capabilities, should support further margin recovery despite greater regulatory scrutiny over government-funded healthcare programmes.
GS US
Capital-markets recovery play with higher earnings torque
KEY INSIGHTS #1
Recovery in IPOs, M&A and trading supports earnings upside.
Goldman Sachs has high operating leverage to a recovery in capital-markets activity, particularly in equities trading, M&A advisory and underwriting. If IPO issuance, M&A completions and AI-related financing remain active in 2H26, Goldman should continue to benefit from increased client activity and higher fee generation. However, its earnings remain sensitive to macro factors such as inflation trends, interest-rate expectations and overall market liquidity, with indicators such as CPI and PPI influencing the Fed’s policy path and, consequently, capital-markets activity and client risk appetite.
KEY INSIGHTS #2
Broader earnings mix improves durability.
Goldman’s 2Q26 strength was broad-based, with Global Banking & Markets revenue up 47% YoY to US$14.8bn, Asset & Wealth Management revenue up 20% to US$4.6bn, and investment-banking fees rising 55% to US$3.4bn. While equities trading and ROE may moderate from exceptional levels, a growing deal backlog, expanding wealth-management platform and US$5.36bn of quarterly capital returns should support earnings and shareholder returns above prior-cycle levels.
STOCKS
STOCKS
–
STOCKS
–
