Straits Times: Thu, Aug 23
THE scorecard in Singapore's current corporate earnings season has so far mostly met market expectations.
But that steady showing has not stopped analysts from cutting earnings estimates and stock calls, given an uncertain outlook.
OSK-DMG Research has tweaked its earnings estimates and stock calls with more downgrades than upgrades, attributing the moves to management's weak growth guidance ahead.
It was the same story at DBS Vickers, with more cuts in target prices of stocks than upgrades. The firm largely expects corporate earnings to put in a mediocre showing this year.
On the whole, analysts are neutral - stock market parlance for having unchanged projections - on the market following the latest round of results, which ends soon.
"It's quite balanced - some earnings upgrades for banks and downgrades for telcos, marine and offshore firms which disappointed in terms of operating margins. Overall, we are quite neutral for the whole market," said Maybank Kim Eng research head Stephanie Wong.
Ms Janice Chua, research head of DBS Vickers, said the biggest disappointment came from consumer plays, including commodity-related stocks, which were hit by lower margins.
These stocks suffered the biggest cuts in target prices, while real estate investment trusts (Reits) and diversified property plays enjoyed the heftiest upgrades by DBS Vickers.
The transport- and commodity-related sectors continue to face headwinds given their exposure to global economies, said Ms Chua.
Reits in Singapore posted healthy earnings with strong annualised dividend yields of 5 per cent to 8.5 per cent.
Notably, all four sub-sectors - retail, office, industrial and hospitality - chalked up resilient earnings in a volatile global market.
Singapore bank bosses expect slower loans growth in financial year 2012, which is a reflection of softening economic growth.
Given the challenging economic environment, OSK-DMG has cut earnings expectations for Singapore Airlines, although the carrier, together with Tiger Airways, reported improving numbers despite a seasonally weaker quarter.
Maybank Kim Eng has not changed its year-end target of 3,200 points for the benchmark Straits Times Index (STI).
OSK-DMG has marginally raised its 12-month target from 3,162 to 3,168 points but expects the market to have a volatile ride before getting there.
Meanwhile, DBS Vickers has cut its earnings growth forecast by 4 per cent to 6 per cent this year and 10 per cent next year, with an STI target of 3,200 pegged at 13 times 2013 earnings.
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