STE SP
Defence exports accelerate, aerospace compounds, and record backlog de-risks growth
KEY INSIGHTS #1
Global defence rearmament is turning international orders into a second growth engine.
ST Engineering secured S$2.4B of Defence & Public Security contracts in 1Q26, including a roughly S$470M Qatar military-vehicle MRO programme, a S$600M subcontract for eight Kuwaiti missile gun boats, and international ammunition orders. The significance is geographic diversification: international defence wins can supplement Singapore’s stable domestic base and support stronger margins as proprietary platforms and lifecycle services scale.
KEY INSIGHTS #2
Commercial Aerospace remains the structural compounder, not merely a passenger-recovery trade.
Commercial Aerospace contributed S$1.7B of new contracts in 1Q26. The segment benefits from structurally constrained global maintenance capacity, ageing aircraft fleets and airlines retaining aircraft longer as new-aircraft deliveries remain constrained. ST Engineering’s airframe, component, engine-nacelle and passenger-to-freighter capabilities provide recurring aftermarket exposure with better visibility than original-equipment manufacturing alone.
YZJSGD SP
Backlog locks in earnings, green-vessel mix protects margins, Hongyuan adds the next growth leg
KEY INSIGHTS #1
The shipbuilding cycle is moderating, but Yangzijiang has already locked in the profitable years.
Global newbuild ordering has slowed from the exceptional 2024 peak, with ship prices reportedly easing around 5%–10%. This is less damaging to Yangzijiang than the headline suggests because its yards are substantially committed through 2029 and the existing backlog was largely secured at stronger pricing. Earnings should therefore continue reflecting earlier high-margin contracts even as current order intake normalises. As of March 2026, the outstanding order book stood at US$22.3B across 252 vessels, with deliveries extending through 2030. Container vessels accounted for approximately US$16.4B of backlog, giving the group unusually strong multi-year revenue visibility.
KEY INSIGHTS #2
Green and higher-specification vessels support a structurally better margin mix.
Approximately 69% of the 1Q26 order-book value comprised clean-energy vessels, including LNG- and methanol-dual-fuel containerships, LPG carriers, very large ethane carriers and ammonia-ready vessels. These ships carry higher technical requirements and generally better contract values than conventional bulkers, supporting both yard utilisation and margin resilience. The FY2025 numbers demonstrate this operating leverage. Gross margin expanded 5.5 percentage points to 34.2%, driven by stronger newbuild pricing, lower raw-material costs and higher contributions from associated yards. Shipbuilding margin reached a record level, meaning the earnings debate is now about how long margins remain elevated rather than whether profitability can recover.
9988 HK
Cloud acceleration meets an earnings trough as AI monetisation overtakes quick-commerce burn
KEY INSIGHTS #1
AI cloud is graduating from narrative to measurable revenue.
Alibaba Cloud’s March-quarter revenue increased 38% YoY to RMB41.63B, accelerating from 36% in the preceding quarter. AI-related products represented approximately 30% of external cloud revenue and maintained triple-digit growth for the eleventh consecutive quarter. Management expects AI-related products to contribute more than half of external cloud revenue in roughly one year.
KEY INSIGHTS #2
Current earnings are deliberately depressed, creating operating leverage if investment intensity peaks.
March-quarter revenue rose only 3% YoY to RMB243.38B, but increased approximately 11% on a like-for-like basis after excluding disposed businesses. Adjusted EBITA fell 84% YoY, while adjusted earnings per ADS dropped to RMB0.62 as Alibaba accelerated spending on AI infrastructure, user acquisition and quick commerce. The market is already treating FY2027 as an investment trough rather than a normal earnings year. Management prioritises market share and growth over near-term margins, but expects cloud margins to improve over the next one to two quarters and quick-commerce unit economics to turn positive by the end of FY2027.
1088 HK
Integrated coal champion, transport moat, and 65% payout commitment
KEY INSIGHTS #1
Transport network is becoming the earnings differentiator, not coal prices.
The market still values Shenhua primarily as a coal producer, but transport is becoming increasingly important. For 1H2026, management guided profit attributable to shareholders at RMB28.4–31.9B, with the principal positive driver being higher profits from coal chemicals and transportation, supported by stronger utilisation of its proprietary railway, port and shipping network. This integrated model allows Shenhua to monetise logistics even when coal prices soften. This makes Shenhua structurally different from Chinese coal peers that rely almost entirely on mining margins.
KEY INSIGHTS #2
Coal prices matter less than investors think.
Coal prices have moderated from peak levels, but Shenhua continues generating substantial free cash flow because of: – low mining costs, – integrated logistics, – power generation, – coal chemical operations. Unlike many miners, Shenhua benefits from internal coal consumption through its power business and captures transport margins across the value chain.
CB US
Direct underwriting beneficiary of the AI data-centre construction cycle
KEY INSIGHTS #1
Broad underwriting capabilities create an end-to-end offering.
Chubb is one of the few global insurers able to cover data centres throughout their lifecycle, spanning builders’ risk, property, engineering, marine, surety, liability, professional lines, cyber, utilities and energy infrastructure. Its balance-sheet capacity and technical underwriting expertise provide an advantage as projects become larger and more complex; this discipline was reflected in 2Q26 core operating income of US$2.84bn, up 14.6% YoY, and a strong 83.8% P&C combined ratio.
KEY INSIGHTS #2
AI infrastructure expands the commercial insurance premium pool.
The AI data-centre boom is creating new demand beyond physical property insurance, including construction delays, equipment damage, power interruption, cyberattacks, supply-chain disruption and operational downtime. As insurable values rise toward US$20bn-US$30bn per location, Chubb can benefit from higher specialty premium volumes and a growing invested-asset base, although disciplined risk selection remains essential given concentration and aggregation risks.
AON US
Asset-light AI infrastructure risk adviser with scalable data-centre exposure
KEY INSIGHTS #1
Expanded data-centre platform supports fee-based growth.
Aon has expanded its Data Centre Lifecycle Insurance Programme from US$3.5bn to US$5bn, covering projects from construction through long-term operations, including property damage, business interruption, cyber and project-cargo risks. Its brokerage and consulting model allows Aon to earn commissions and advisory fees while transferring most underwriting risk to insurers and reinsurers, providing relatively capital-light exposure to the AI infrastructure buildout.
KEY INSIGHTS #2
Larger and more complex data centres increase demand for risk placement.
Annual data-centre investment could exceed US$300bn by 2027, while rising coverage demand could generate around US$10bn of new insurance premiums in 2026. With some hyperscale projects carrying total insurable values of US$10bn-US$30bn, capacity constraints are encouraging multi-insurer and reinsurance structures, increasing demand for Aon’s risk modelling, programme design and placement capabilities.
STOCKS
STOCKS
Aon Plc (AON US) at US$370
Zixin Group Holdings Ltd (ZXGH SP) at S$0.03
Eli Lilly & Co. (LLY US) at US$1,140
STOCKS
Meta Platforms Inc (META US) at US$580
