Wed Mar 28, 2012 3:53am EDT
UBS remains bullish on crude palm oil (CPO) prices on worse-than-expected soybean harvests and as the Chinese government increased its edible oil imports.
UBS said small plantations had outperformed others over recent months. However, larger plantation companies whose earnings had higher sensitivity to CPO prices, had started to perform well over the past two weeks, it said.
Golden Agri Resources Ltd, Sime Darby Bhd , and Salim Ivomas are the brokerage's top picks for Asia's plantations sector.
"Golden Agri has high earnings per share sensitivity to CPO price changes and its share price has high beta to CPO price as well. As CPO price continues its rally, we believe there will be increased interest in Golden Agri," UBS said.
"We also continue to like Salim Ivomas, given its outlook for robust earnings growth due to strong production potential from its large proportion of young and immature plantations and continuing deleveraging."
UBS also likes Sime Darby because of an improving outlook of its non-plantation business due to strong heavy equipment and auto sales, which it expects to boost overall earnings growth.
Golden Agri was down 1.3 percent at S$0.77. Sime Darby was flat at 9.75 ringgit, while Salim Ivomas gained 1.45 percent to 1400 rupiah.
For a report on palm oil, click
1540 (1540 GMT)
(Reporting by Mark Tay in Singapore; mark.tay.thomsonreuters.com)
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15:06 STOCKS NEWS SINGAPORE-JPMorgan raises First Resources target price
JPMorgan has raised its share price target for Singapore palm oil firm First Resources Ltd to S$2.20 from S$2.10 and kept its overweight rating, citing strong production growth and expansion into the refining business.
By 0700 GMT, shares of First Resources were 0.3 percent higher at S$1.925. They have gained 27.5 percent so far this year.
The broker also raised its 2012 and 2013 earnings estimates for First Resources by 16 and 24 percent respectively, adding that the company remains one of its top picks for the sector.
The continued strength in crude palm oil (CPO) prices, driven by tight soybean supply, may benefit firms such as First Resources as it can achieve strong CPO production and deliver better-than-expected quarterly results, JPMorgan said.
It added that First Resources is one of the most efficient palm oil players in the region and so far this year has recorded CPO production growth of 27.2 percent year-on-year.
1502 (0702 GMT)
(Reporting by Charmian Kok in Singapore; charmian.kok.thomsonreuters.com)
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13:57 STOCK NEWS SINGAPORE-Index slips, Keppel Corp outperforms
Singapore shares fell by midday, largely in line with regional bourses, but rig builder Keppel Corp Ltd bucked the trend after announcing a rig deal worth $315 million.
The Straits Times Index was down 0.5 percent, or 14.11 points, at 3,004.80. The MSCI's broadest index of Asia Pacific shares outside Japan eased 0.4 percent.
Keppel rose as much as 0.5 percent and were the fifth most actively traded stock by value. The rig builder signed a letter of intent to build a harsh-environment accommodation semi-submersible rig worth $315 million.
"Should this LOI turn effective, which we think is highly possible, Keppel would have secured new orders worth about S$580 million year to date," OCBC Investment Research said. It retained its buy rating on Keppel with a target price of S$12.27.
Shares of palm oil firm Wilmar International Ltd fell as much as 1.6 percent and were the third most actively traded stock by value in the market. Citigroup downgraded Wilmar to hold from buy and cut its target price to S$5.30 from S$6.10.
1345 (0545 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata.thomsonreuters.com)
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13:11 STOCKS NEWS SINGAPORE-CIMB raises price target for Genting
CIMB Research increased its price target for Singapore-listed Genting Singapore to S$2.00 from S$1.85 and kept its outperform rating on the casino operator.
Genting's shares were down 0.9 percent at S$1.72.
CIMB said the launch of Resort's World Sentosa's (RWS) Equarius Hotel and beach villas were timely to capture the potential stream of VIP players from the two new junket operators.
Last week, the Casino Regulatory Authority approved the licenses of two junket operators.
The partial opening of 100 rooms at the Equarius Hotel and 17 of the beach villas have seen rooms "running at close to full occupancy" while marketing activities are expected to begin in the second half of the year, CIMB said.
CIMB said junket operations can help alleviate concerns of RWS's bad debt provisions and declining VIP volumes.
1300 (0500 GMT)
(Reporting by Mark Tay in Singapore; mark.tay.thomsonreuters.com)
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12:49 STOCKS NEWS SINGAPORE-Nomura likes defensive sectors
Nomura has an overweight call on defensive stocks or sectors in Singapore, citing downside risks to economic and earnings growth this year due to a combination of weak external demand, higher costs and a correction in the property market.
The Singapore market's fair value was at 1.5 times price-to-book and resistance was seen at 3,000 points, Nomura said.
The Straits Times Index .FTSTI has jumped 14 percent this year, but has struggled above 3,000.
"Consensus market earnings growth estimate of 9 percent is under pressure from weak external demand and higher costs, in our view," Nomura said in a strategy report.
It was bullish on conglomerates, as strong balance sheet and cash flows are likely to support firm dividend yields, and healthcare firms due to resilient earnings. But it was bearish on gaming due to policy risks and downside risks to earnings expectations.
Nomura's top stock picks for defensive earnings with yield include property and food and beverage company Fraser and Neave Ltd FRNM.SI and transport operator ComfortDelGro Corp Ltd CMDG.SI. It also has a buy rating on companies including Golden Agri Resources Ltd GAGR.SI and Keppel Corp Ltd KPLM.SI.
1240 (0440 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata.thomsonreuters.com)
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11:45 STOCKS NEWS SINGAPORE-Citi downgrades Wilmar to hold
Citigroup reduced its rating on Singapore palm oil firm Wilmar International Ltd to hold from buy and cut its target price to S$5.30 from S$6.10.
Wilmar shares were down 1 percent at S$4.97. The shares are flat so far this year, underperforming a 14 percent rise in the broader market.
Citigroup said the company's second half of 2011 was a disappointment as it had weak margin trends at both its oilseeds and palm merchandizing units due to heightened volatility.
While market normalization will help Wilmar's margins recover in these two segments in 2012 fiscal year, the pace of recovery this year will be muted as Wilmar did not record sharply reduced inventory and receivables in the second half of 2011, Citi said in a report.
"While execution on expansion plans in Indonesia may be slow for new entrants, there is now potential that more competitors (both existing and new) may be encouraged to set up facilities."
1140 (0340 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata.thomsonreuters.com)
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10:19 STOCK NEWS SINGAPORE-Otto Marine falls after rights issue
Shares of Singapore's Otto Marine Ltd declined as much as 11.1 percent after the offshore marine firm proposed a rights issue to raise around S$75.6 million ($60 million).
Otto Marine shares were down 9 percent at S$0.131 on volume of 13.7 million shares, 3.3 times the average full-day volume traded over the past 30 days.
The stock was among the top five traded shares by volume.
Otto Marine said on Wednesday it plans to issue up to 945.21 million rights shares at S$0.08 each on the basis of one rights share for every two existing shares.
For a related story, click:
1010 (0210 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata.thomsonreuters.com)
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08:50 STOCKS NEWS SINGAPORE-Singapore index futures slip
Singapore index futures fell 0.2 percent, indicating a weak start for the benchmark Straits Times Index.
Asian shares drifted lower on Wednesday as investors waited for more clues on the state of the U.S. economy, after hopes for further stimulus from the U.S. Federal Reserve strengthened risk appetite and boosted prices the previous session.
0847 (0047 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata.thomsonreuters.com) ($1 = 1.2563 Singapore dollars)
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