Week 36 equity strategy: Following Fed chief Kevin Warsh’s remarks at Jackson Hole, markets revised upward the probability of a September rate hike to 60%, from 35%. The two key takeaways were (i) the US economy is strong as reflected by business capital expenditure, unemployment claims, real consumer spending, and S&P 500 corporate earnings. Market indicators are also conducive, such as credit spreads, equity market volatility, and loan officer surveys; (ii) inflation is more concerning because the Fed has not met its target for 65 months. The key is to capture the direction of underlying inflation. He measures this by the percentage of PCE Index price of 199 goods and services components above 3%. It is now 54%, which is quite elevated but well below the pandemic high. Our base case is no rate hike. We think it is politically unpalatable. Mid-term elections are approaching, and rising rates are counter to President Trump’s recent comments that rates are artificially high. It is also counter to the Treasury’s recent bond purchases to keep long bond yields lower.

In small caps, we maintain our BUY recommendation on iX Biopharma and Geo Energy. iX Biopharma’s WaferiX® sublingual drug delivery technology is rapidly progressing toward commercialisation with support from partners – the US Department of Defense on Wafermine for EUA and Phase 3 approval and Orion Speciality Labs for the 40 other drugs for the US compounding pharmacy market. With the completion of the US$190mn road and jetty, Geo’s coal production will ramp up at around 40% YoY in 2H26 and at a lower cost. Coal prices surging by 50% YoY so far in 3Q26 will be another major support to earnings. The completion of a partial sale of the infrastructure, together with long-term off-takers for its use are further share price drivers.

Paul Chew
Head Of Research
Paulchewkl@phillip.com.sg

Singapore stocks ended higher on Friday (Aug 28), as investors awaited US Federal Reserve chairman Kevin Warsh’s speech at the Jackson Hole Economic Symposium, an annual gathering for central bankers. The local benchmark gained 0.3 per cent or 15.81 points to finish at 5,699.93.

The S&P 500 fell on Friday, but still notched a winning week, after Federal Reserve Chairman Kevin Warsh conveyed some worry over current inflation trends. The broad market index lost 0.25% and closed at 7,711.76, while the Nasdaq Composite slid 0.52% to 26,402.42, weighed down by losses in semiconductor stocks such as Nvidia and Intel. The Dow Jones Industrial Average was down 9.45 points, or 0.02%, and ended at 53,559.99.

SG

Shareholders of real estate giant Frasers Property approved at a Friday (Aug 28) extraordinary general meeting a proposed portfolio optimisation of its hospitality assets under Frasers Hospitality Trust (FHT), which was taken private in 2025.

A consortium formed by ComfortDelGro and French transport company RATP Dev will operate and maintain all four lines of the Copenhagen metro system from September 2027, after beating out two other bidders.

Sheffield Green, a human resources provider for the clean energy sector, is looking into acquisitions related to the operations and maintenance of wind power infrastructure and other opportunities.

Property developer GuocoLand on Friday (Aug 28) posted a 70 per cent drop in net profit to S$9.8 million for the second half ended Jun 30, from S$32.4 million for the year-ago period.

US

Aon is near an agreement to buy insurance brokerage USI Insurance from private-equity firm KKR for roughly $17 billion, including debt. A deal could be announced as soon as Monday, assuming it comes together.

OpenAI plans to wind down its contract supplying models to Cursor, with a proposed Nov. 12 cutoff. OpenAI says it cannot be confident SpaceX will comply with its terms, citing past disputes with Elon Musk’s companies. CEO Michael Truell says OpenAI models account for about 5% of Cursor user traffic and that the companies are discussing the decision.

Blue Owl Capital Inc. funds led a $2.4 billion debt deal for Iren Ltd. to buy Nvidia Corp.’s Blackwell Ultra GPUs for a data center campus in Canada. The deal consists of a $1.2 billion senior-secured term loan and $1.2 billion senior secured notes, with a 9% interest rate and a maturity of two and half years. The debt will help support the build out of computing capacity for Iren’s Mackenzie data center campus in British Columbia.

Oil surged after fresh fighting flared up in the Strait of Hormuz, highlighting risks to flows from the Middle East after months of conflict. Brent for November rose above US$90 a barrel, while West Texas Intermediate was near US$86.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, The Edge Singapore, PSR

Geo Energy Resources Ltd – De-risked, ready to rumble

Recommendation: BUY; TP S$0.75; Last close: S$0.5300; Analyst Paul Chew

• 1H26 results were within our expectations. Revenue/PATMI were 36%/37% of our FY26e forecast. Production in 1H26 declined 42% YoY to 3.8mn. Production will be shifting to the newly completed infrastructure. An older mine was also undergoing a pit expansion. Sales target for FY26e of 11.5-12.5mn MT is unchanged (FY25: 12.5mn MT).
• The 92km US$190mn integrated infrastructure (hauling road and jetty) or MBJ is completed and running since July. It has a capacity of 25mn MT. We expect Geo to transport 4mn MT of coal produced utilising MBJ in 2H26. Our estimate for FY27e is 11mn MT. The extra capacity of the infrastructure will generate toll and jetty fees.
• We maintain our FY26e earnings and BUY recommendation. Our DCF target price of S$0.75 is unchanged. With the infrastructure completed, earnings visibility for Geo has been de-risked. FY27e will be a milestone. We forecast production to hit 17mn MT (+40%) and cash costs to decline. An additional driver to earnings will be infrastructure fees supported by multi-year contracts. Coal prices are also on an upward trajectory, up 53% YoY in 3Q26 so far.

NVIDIA Corporation – ACIE overtakes hyperscale growth

Recommendation: BUY; TP US$300.00; Last close: US$; Analyst Yik Ban Chong (Ben)

• 2Q27 revenue/PATMI were within our expectations. 1H27 revenue and PATMI were at 46%/48% of our FY27e forecasts. 2Q27 data centre revenue surged 117% YoY to US$89bn, the fastest growth since 2Q25. Growth was driven by hyperscalers’ sustained AI spending on Blackwell Ultra, and acceleration of ACIE revenue as sovereign AI revenue more than tripled YoY. In June 2026, NAVER and NVIDIA announced collaboration to build AI factories to scale South Korea’s sovereign intelligence infrastructure starting from 55MW, with plans to move to gigawatt scale.
• NVIDIA guides FY28e revenue to grow about 70% YoY (FY27e: +98% YoY), constrained by supply factors such as land, power, shell, and cooling. Without such constraints, demand could grow more than 100% in FY28e. We raised our FY28e revenue growth assumptions to +53% YoY (prev. 43% YoY), with room to adjust upwards based on Vera Rubin’s supply ramp progress. Global semiconductor spending surged 108% YoY in 1H2026 to US$675bn, driven by hyperscaler, enterprise, and sovereign nations’ AI buildout.
• We maintain BUY with a higher TP of US$300 (prev. US$285). We raised our FY27e revenue and PATMI by 11%, due to stronger growth expected from ACIE segment from a surge in sovereign demand, and rapid Vera Rubin ramp in 2H27e. We raised our WACC to 8.4% from 7.9% by raising our equity risk premium, as rising memory costs are a headwind to NVIDIA’s margins. NVIDIA trades at a FY27e P/E of 24x, a 32% discount to peers’ average of 35x.

Salesforce Inc – The end of the SaaSpocalypse

Recommendation: NEUTRAL; TP US$243.00; Last close: US$; Analyst Alif Fahmi

• 2Q27 revenue met our expectation, while PATMI lagged. 1H27 revenue and PATMI were 49% and 42% of our FY27e forecast respectively. The lower-than-expected earnings were mainly driven by higher R&D and sales & marketing spending.
• Salesforce is positioning itself as the enterprise AI data layer through Headless and Claudeforce, extending CRM data and agents into Claude, Slack and Teams. Management expects 2H27 growth to be driven by premium AI products (Agentforce, Slackbot and Claudeforce), usage-based monetization and customer upgrades, with significant runway as only 5% of users are on higher-tier editions.
• We maintain a NEUTRAL recommendation with a higher DCF target price of US$243 (prev. US$166). We lowered our FY27e PATMI estimate from increasing R&D, marketing, and sales expense estimates. We raised back our terminal growth rate from 3% to 5.5%, following the re-rating of the company shares which was driven by Anthropic’s Claudeforce partnership, improving confidence in its core CRM business (strong bookings, low attrition and customer expansion), and stronger software sector sentiment as enterprise AI monetization gains traction.

Thomson Medical Group Ltd – Turnaround is underway

Recommendation: BUY; TP S$0.71; Last close: S$0.0540; Analyst Paul Chew

• FY26 revenue/EBITDA met expectations at 97%/98% respectively of our forecast. Net losses were narrower than expected from lower finance costs. EBITDA expanded 21% YoY in 2H26 to S$43.6mn. All countries- Singapore, Malaysia, Vietnam- experienced a recovery in earnings. There was a S$15.2mn goodwill impairment due to a higher discount rate assumed.
• Growing revenue intensity has been the major driver of earnings. Singapore is adding more orthopaedics, ENT and general surgery.  Malaysia is building up oncology, supported by the return of some insurers. Vietnam has higher volumes, including robotic surgery, and more capacity. Currency was a headwind to the results.
• We maintained our FY27e earnings. Our recommendation is upgraded to BUY due to recent share price performance. The SOTP target price is unchanged at S$0.071. We roll over our valuation to FY27e earnings but reduce our Johor GDV estimates. The company is turning around operational performance by pivoting Singapore from its reliance on O&G cases. Malaysia is onboarding back insurers, with foreign patients and oncology leading the increased revenue intensity.  Finance costs are weighing on earnings. Any sale of the Johor land bank could reverse the earnings profile.

iX Biopharma Ltd – Galloping closer with partners

Recommendation: BUY; TP S$1.00; Last close: S$0.4050; Analyst Paul Chew

• FY26 results were below expectations. Revenue/Net Loss were 72%/170% of our FY26e forecast. The transfer of a machine from Australia to the US resulted in lower medicinal cannabis sales (~S$3mn).  Additional expenses, such as professional fees (~S$1mn) and the performance share plan (~S$2mn), were not modelled.
• The US$40.9mn Wafermine Programme (funding the Phase 3 and EUA development of Wafermine) from the US Department of Defense has started, with S$1.2mn recognised as development services. We believe the EUA submission and preparation for the Phase 3 study for Wafermine are advancing according to schedule.
• We are incorporating higher upfront costs from the US wholesale compounding pharmacy operations and an increase in performance shares. The expected tripling of revenue in FY27e will be driven by compounding pharmacy (with partner Orion Speciality), Wafermine sales, and development services. Our DCF SOTP target price of S$1.00 and BUY recommendation are unchanged. The major milestones for iX Biopharma will be the Wafermine EUA submission (4Q26), EUA approval (1Q27), EUA production (2Q27) and Phase 3 trials approval (2Q27). We also expect the US production line to commence in 1Q27, with another three in 2Q27.

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