Tue Jul 31, 2012 1:07am EDT
Singapore shares were lower, with palm oil giant Wilmar International Ltd among the biggest decliners after J.P. Morgan cut its target price on the stock by 35 percent, citing a tough outlook due to high soybean costs.
The Straits Times Index (STI) was down 0.4 percent at 3,021.44 points, while MSCI's broadest index of Asia-Pacific shares outside Japan was up 1 percent.
Wilmar shares fell as much as 1.8 percent and were the worst performing stock on the STI so far this year. The stock has been under pressure on concerns about its margins and China's move to ask producers to avoid raising edible oil prices.
"We believe Wilmar will continue to face crush margin pressure from higher soybean raw material costs in China," J.P.Morgan said in a report, reducing its target price on the stock to S$2.80 from S$4.30 and keeping its neutral rating.
DBS Vickers recommended locking in profits from small and midcap stocks that have rallied close to their fundamental target prices, such as Raffles Medical Group, Super Group and CDL Hospitality Trusts.
DBS advised investors to take advantage of an eventual pullback to buy stocks with strong and visible catalysts, including Bumitama Agri and Tiger Airways Holdings .
1254 (0454 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com)
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11:49 STOCKS NEWS SINGAPORE-JPMorgan cuts Wilmar target price
J.P. Morgan cut its target price for palm oil firm Wilmar International Ltd to S$2.80 from S$4.30 and kept its 'neutral' rating, citing tough outlook due to high soybean costs.
By 0329 GMT, Wilmar shares were 1.2 percent lower at S$3.24, and have fallen about 35 percent so far this year, versus the Straits Times Index's 14.4 percent rise.
"We think Wilmar's share price may trade lower into the upcoming second quarter results," J.P. Morgan said in a report, adding that the tough operating environment has not been fully factored into consensus earnings estimates.
Soybean price has increased over 40 percent so far this year, and is expected to remain high, which will continue to pressure Wilmar's crush margins, the brokerage said.
It reduced earnings estimates for 2012 by 17 percent on lower margin assumptions.
1139 (0339 GMT) (Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)
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11:37 STOCKS NEWS SINGAPORE-Sakari Resources up after Q2 result
Shares of Sakari Resources Ltd rose to the highest in nearly two weeks after the coal producer posted a 66 percent increase in its second-quarter net profit from the previous three months on the back of lower costs and higher output.
Sakari shares gained as much as 4.7 percent to S$1.33, the strongest level since July 19. Sakari stock has fallen 28 percent so far this year.
Nearly 28 million Sakari shares changed hands, 1.2 times the average full-day volume over the past 30 days. Sakari was among the top traded stocks by both value and volume in the Singapore market.
The company turned in net profit of $23.9 million for the quarter ended June, up from $14.5 million in the preceding three months. But net profit fell 39 percent from a year earlier.
"Year-on-year, coal prices had fallen quite a lot and we had expected the weaker performance. But the quarter-on-quarter improvement was actually a lot stronger than what we expected," said Carey Wong, an analyst at OCBC Investment Research.
"The key reasons for the improvement in margins is that they managed to sustain the average selling prices, and they have also managed to reduce cash costs slightly faster than what we expected."
1135 (0335 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com)
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11:18 STOCKS NEWS SINGAPORE-Deutsche cuts COSCO, Yangzijiang target prices
Deutsche Bank cut its target prices for COSCO Corp Singapore Ltd and Yangzijiang, citing poor outlook for the Chinese shipbuilding sector.
Shares of Yangzijiang were 0.5 percent lower at S$1.005 by 0305 GMT. They have risen 10.4 percent so far this year. COSCO was down 0.5 percent at S$0.955. It has gained 9 percent this year, compared with the FT ST Industrial Index's 13.7 percent rise.
"Operating conditions and outlook in the Chinese shipbuilding sector remain challenging," due to declining new orders, falling ship prices, weak vessel financing and intensifying competition amongst Chinese yards, said Deutsche Bank in a report.
The brokerage cut its target price for Yangzijiang to S$1.10 from S$1.20, kept its 'hold' rating, and lowered its new order assumptions in 2012-2014 by 13-33 percent.
It also lowered COSCO's target price to S$1.00 from S$1.10, maintained its 'hold' rating and cut its new order assumptions for 2012-2013 by 11-17 percent. As a result, it trimmed its net income estimates for the shipbuilder by 9.1-9.4 percent over the same period.
1111 (0311 GMT) (Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)
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9:56 STOCKS NEWS SINGAPORE-OCBC raises target on Tiger Airways
OCBC Investment Research raised its target price on Tiger Airways Holdings Ltd to S$0.83 from S$0.76 and maintained its buy rating, citing the Singapore budget carrier's improved operations.
Tiger shares were up 0.7 percent at S$0.695 and have risen around 9 percent so far this year versus the 15 percent gain in the FT ST Small Cap Index.
Tiger's passenger yields in its fiscal first quarter rose 9 percent from a year earlier, while the fall in average jet fuel prices provided some cost relief, OCBC noted.
OCBC said the first-quarter operating profit posted by Tiger's Singapore operations bodes well for the rest of the 2013 fiscal year as it is no longer burdened with excess aircraft, allowing it to moderate its capacity expansion in 2013.
Tiger's Australian unit is primed for recovery with the ramping up of its operations to 60 sectors a day, after being hit by flying restrictions, and the expected peak travel season later in the year, OCBC said.
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0946 (0146 GMT)
(Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com)
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