Fri Jun 29, 2012 1:20am EDT
Singapore shares rose for the third straight session, with gains fuelled by the three local banks, while Citigroup raised its rating on the market.
The Straits Times Index gained as much as 1.6 percent to 2,893.45 points, the highest since May 14. The index is up 4 percent this month, taking the total rise to around 9 percent this year as Southeast Asian bourses lead global gainers.
MSCI's broadest index of Asia-Pacific shares outside Japan has risen 3 percent this year. The outlook for world stocks is however tempered by the euro zone, Reuters polls showed.
Among the day's gainers, United Overseas Bank rose 2.1 percent, OCBC advanced 2.2 percent and DBS Group Holdings added 1.1 percent.
Citigroup raised its rating on Singapore stocks to overweight from underweight, saying consensus on the city-state had been too bearish. Its model portfolio included Oversea-Chinese Banking Corp and Sembcorp Marine .
1300 (0500 GMT)
(Reporting by Leonard How in Singapore; leonard.how@thomsonreuters.com)
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12:39 STOCKS NEWS SINGAPORE-UOB may seek M&A in wealth space-Citi
Singapore's smallest lender by assets, United Overseas Bank , will consider tactical acquisitions, especially in wealth management, to grow its assets under management (AUM), Citigroup said after an investment conference that UOB participated in.
UOB would like to grow AUM from current levels of around S$30 billion ($23.4 billion) to "a more critical mass level of S$60-70 billion," Citi said in a report.
UOB lags behind local rivals DBS Group and Oversea-Chinese Banking Corp in wealth management, with the latter two managing well over $30 billion in assets for high-net-worth individuals alone via their private bank and private client operations.
Citi, which has a sell rating on UOB with a S$17.70 price target, said UOB may have to review its long-stated medium-term target of raising returns on equity to 15 percent. UOB's ROE is currently around 12 percent.
UOB shares were up 2 percent at S$18.77 in a strong broader market, after gaining 20 percent so far this year, matching an increase in DBS shares.
1220 (0420 GMT)
(Reporting by Kevin Lim in Singapore; kevin.lim@thomsonreuters.com)
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12:13 STOCKS NEWS SINGAPORE-DBS Vickers lowers Sakari target
DBS Vickers cut its target price on coal mining firm Sakari Resources to S$1.80 from S$2.40 on lower coal price assumptions, but kept its buy rating.
Sakari shares were up 2.6 percent at S$1.37. The stock has fallen around 25.5 percent so far this year, underperforming the FTSE ST Mid Cap Index's 14.5 percent gain.
DBS cut its earnings estimates for Sakari's 2012/2013 fiscal year by 25-28 percent as it revised downwards its average coal price assumptions for 2012/2013 fiscal year by about 10-15 percent to $100 per tonne.
But coal prices are expected to have a mild rebound in the second half of 2012, DBS said, adding downside risk is limited at Sakari's current share price and the firm offers a "healthy" dividend yield of 6 percent.
1204 (0404 GMT)
(Reporting by Leonard How in Singapore; leonard.how@thomsonreuters.com)
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11:16 STOCKS NEWS SINGAPORE-Citi ups Singapore to overweight
Citigroup raised its rating on Singapore stocks to overweight from underweight, saying consensus on the city-state had been too bearish.
"Total returns from Singapore would be 12.6 percent per annum if it takes three years to mean-revert based on the 20-year average price to book valuation. That would be four times higher than the total return for the next best market in ASEAN," Citi said in a report.
The Singapore market currently trades at a price-to-book valuation of 1.4 versus a historical average of 1.9, according to Citi, well below other ASEAN markets that trade above 2.
Among Southeast Asian markets, Singapore's main index is up 9 percent so far this year, followed by Malaysia and Indonesia.
"Our model portfolio already owned Sembcorp Marine and OCBC. Today, we are adding Noble Group and Wilmar," Citi said.
It said earnings estimates for Singapore firms were more realistic than elsewhere and hence less likely to be revised downwards.
"Consensus is already underweight Singapore, and over the last month has further increased the underweight. Expectations are low."
1050 (0250 GMT)
(Reporting by Kevin Lim in Singapore; kevin.lim@thomsonreuters.com)
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10:58 STOCKS NEWS SINGAPORE-OCBC upgrades First REIT to buy
OCBC Investment Research upgraded healthcare real estate investment trust First REIT to 'buy' from 'hold' and raised its target price to S$0.96 from S$0.935, citing the possibility of acquisitions.
Units of First REIT were flat at S$0.915 on Friday and have gained around 21 percent so far this year.
OCBC said First REIT could see a distribution per unit accretion of 9 to 13 percent in 2013 fiscal year, assuming the firm acquires two hospitals for around S$88.9 million ($69.43 million).
It expects minimal dilution risk as any acquisitions would likely be fully debt-funded. First REIT will not have any refinancing requirements until 2015 following the firm's recent S$168 million transferable term loan facility, OCBC added.
OCBC also said First REIT's defensive income streams and stability from its long-term master leases are attractive as volatility in the macro economy and global markets is unlikely to dissipate in the near term.
1047 (0247 GMT)
(Reporting by Leonard How in Singapore; leonard.how@thomsonreuters.com)
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10:09 STOCKS NEWS SINGAPORE-Nomura upgrades Wing Tai to buy
Nomura Equity Research upgraded property developer Wing Tai Holdings to 'buy' from 'neutral' and raised its target price to S$1.76 from S$1.60.
Wing Tai shares were up 0.8 percent at S$1.33 and have risen 41 percent so far this year.
Nomura said while the market is concerned about Wing Tai's exposure to the tepid prime luxury segment, most of the downside risk is already priced in. It believes the market's current valuation of Wing Tai's portfolio is "overly conservative".
Potential catalysts for re-rating include higher-than-expected dividend and redevelopment of existing properties to realise hidden value, Nomura said.
"To replenish its residential land bank at a reasonable cost, we believe the company could explore redevelopment potential of its existing properties, such as the industrial properties in Kovan," Nomura said.
1000 (0200 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com)
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09:36 STOCKS NEWS SINGAPORE-OCBC upgrades Tiger Air to buy
OCBC Investment Research upgraded Singapore's Tiger Airways Holdings Ltd to 'buy' from 'hold' and raised its target price to S$0.76 from S$0.67, citing lower jet fuel prices and expected improvement in the budget carrier's operations.
Tiger shares were up 2.2 percent at S$0.685 and have risen nearly 8 percent so far this year.
OCBC said Tiger is likely to benefit from the current respite in jet fuel prices, especially with fuel cost contributing to more than 40 percent of its operating costs.
OCBC estimated that Tiger can achieve around S$5 million ($3.9 million) of savings in fuel costs in the first quarter of 2013 fiscal year, given the 7 percent quarter-on-quarter fall in average jet fuel prices.
With Tiger's Australian unit flying more sectors and lowering its unit fixed cost and Tiger Singapore more focused on improving yields and load factors, the budget carrier's profitability is poised to considerably improve in 2013, OCBC said.
0930 (0130 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com) ($1 = 1.2804 Singapore dollars)
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