Reuters: Hot Stocks: STOCKS NEWS SINGAPORE-UOB expects consensus downgrades for market

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STOCKS NEWS SINGAPORE-UOB expects consensus downgrades for market May 17th 2012, 05:11 Thu May 17, 2012 1:11am EDT Singapore companies are likely to see cuts in earnings estimates after a weak quarterly performance, UOB Kay Hian said. The number of poorer-than-expected results was one of the highest since 2009, with 38 percent of the results in January-March coming in below market expectations versus 31 percent in the previous quarter, the brokerage said, citing rising cost pressures as a factor. "We see potential consensus downgrades ahead as the street trims earnings to reflect weaker top-line growth and margin pressure. Hence, we see the Straits Times Index to range trade until there is more earnings clarity and when the dust settles on the external outlook," UOB said. Commodity firms such as Wilmar and transport companies disappointed markets, while banks reported strong results. "Our current strategy would be to selectively buy on sharp dips and overweight high dividend yield stocks or stocks with good earnings visibility at reasonable valuations." UOB's top picks are DBS, CapitaLand , Ezion, M1, Suntec REIT, Keppel Corp and OUE and its key sells include City Developments and Neptune Orient . Singapore's benchmark Straits Times Index has declined this month, but is still up nearly 7 percent so far this year, trailing markets in Thailand, Philippines and Vietnam. 1250 (0450 GMT) (Reporting by Leonard How in Singapore; leonard.how@thomsonreuters.com) ************************************************************ 11:32 STOCKS NEWS SINGAPORE-CIMB upgrades Singapore banks to overweight CIMB Research has upgraded its rating on Singapore's banking sector to overweight from neutral, citing better-than-expected first quarter results due to higher trading income and lower credit provisioning. "All posted results that exceeded expectations, boosted by record interest income, decent fee income growth and, most of all, strong trading and insurance performance," CIMB said. Oversea-Chinese Banking Corp's net profit beat expectations by 25 percent, while DBS Group Holdings exceeded expectations by 19 percent and UOB beat net profit forecasts by 10 percent, CIMB said in a report. It added that the asset quality of banks remain sound, as provisions fell in January-March with non-performing loans as a proportion of total loans were flat. DBS, Southeast Asia's largest lender, remains CIMB's top pick as it believes the bank has the highest earnings quality in the sector. DBS posted the strongest growth in fee income in the first quarter, which is more recurring and higher in quality as compared to the more volatile trading and insurance contributions. UOB is CIMB's second pick in the sector, and it has an outperform rating with a target price of S$20.17. CIMB also has an outperform rating on OCBC with a target price of S$10.35. DBS shares were 0.15 percent higher at S$13.60, and have risen about 18 percent since the start of the year. UOB shares were 0.7 percent up at S$18.13, and have climbed 18.7 percent since the start of the year. Shares of OCBC rose 1.2 percent to S$8.70, and have gained 11 percent since the start of the year. The benchmark Straits Times index has risen about 7.5 percent this year. For related story click 1029 (0229 GMT) (Reporting by Charmian Kok in Singapore; Editing by Ramya Venugopal; charmian.kok@thomsonreuters.com) Link this Share this Digg this Email Reprints

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