WHILE SINGAPORE'S Q1 GDP fell a worse-than-expected 11.5% year-on-year and plummeted nearly 20% sequentially, key Singapore-listed firms within the coverage universe of Credit Suisse still had strong enough quarterly performances to allow the brokerage to reiterate its ‘overweight’ call on its Singapore market strategy.
And while the city-state’s overall economy shows no imminent signs of a full recovery, with the Ministry of Trade and Industry (MTI) recently saying GDP is expected to shrink by between 6% and 9% this year, Credit Suisse was still somewhat cheered by prospects for the 36 firms in question.
As of Tuesday, May 12, about 59% of the companies (by market cap) under Credit Suisse’s coverage had reported Q1 results.
“There were 8 positive surprises and 10 disappointments. Half (18) of the results were in line,” Credit Suisse said in the note to investors.
The Swiss group said positive surprises came from DBS, Great Eastern, HLF, HWT, Noble, OCBC, Venture and Chinese shipbuilder Yangzijiang.
“Disappointments were CapitaLand, CMT, COSCO, CSM, KepLand, RLS, SMRT, SPH, STE and Wing Tai.”
Despite the fact that disappointments on to-date earnings issuers outnumbered positive surprises by a running tally of 10 to 8, Credit Suisse is stilly raising its FY2009 earnings estimates for 11 companies and cutting earnings forecasts for 10.
“Overall, we have raised our FY09E earnings by 7%. We now project earnings growth (MSCI names) of -28% in FY09E and +11% in FY10E,” Credit Suisse said.
Following six consecutive months of aggressive downgrades in consensus EPS, Credit Suisse started to see a “small upgrade” last month.
“Looking at the latest results in May so far, we expect the further upgrades in consensus EPS.” The STI’s Friday, May 8 close of 2,238 means the index has now hit Credit Suisse’s top-down target of 2,236. The market is now trading at 1.52x P/B, or 1 standard deviation below the five-year average P/B of 1.87x.
“Heading back to the five-year average P/B implies a STI of 2,749 (or +23% from current levels). This, in our view, could materialise over the next 12 months, as we start to discount a return to positive economic growth trend.”
Credit Suisse added that its top Singapore picks are SIA, SGX and UOB, while least preferred names are COSCO, ST Engg and SMRT.
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Stock Price
AEM Holdings (AWX) 1.860 0.000 (0.00%) Best World (CGN) 2.490 -0.010 (-0.40%) Boustead Singapore (F9D) 0.955 0.005 (0.53%) Broadway Ind (B69) 0.156 0.008 (5.41%) China Aviation Oil (S) (G92) 0.875 0.005 (0.57%) China Sunsine (QES) 0.400 0.000 (0.00%) ComfortDelGro (C52) 1.380 0.000 (0.00%) Delfi Limited (P34) 0.880 0.005 (0.57%) Food Empire (F03) 1.110 0.000 (0.00%) Fortress Minerals (OAJ) 0.295 0.000 (0.00%) Geo Energy Res (RE4) 0.305 0.000 (0.00%) Hong Leong Finance (S41) 2.440 0.000 (0.00%) Hongkong Land (USD) (H78) 3.470 -0.030 (-0.86%) InnoTek (M14) 0.515 0.005 (0.98%) ISDN Holdings (I07) 0.310 0.005 (1.64%) ISOTeam (5WF) 0.049 -0.001 (-2.00%) IX Biopharma (42C) 0.040 0.000 (0.00%) KSH Holdings (ER0) 0.250 0.000 (0.00%) Leader Env (LS9) 0.049 0.000 (0.00%) Ley Choon (Q0X) 0.056 0.002 (3.70%) Marco Polo Marine (5LY) 0.068 0.001 (1.49%) Mermaid Maritime (DU4) 0.138 0.000 (0.00%) Nordic Group (MR7) 0.300 -0.005 (-1.64%) Oxley Holdings (5UX) 0.088 0.001 (1.15%) REX International (5WH) 0.125 -0.001 (-0.79%) Riverstone (AP4) 0.935 0.005 (0.54%) Southern Alliance Mining (QNS) 0.485 0.000 (0.00%) Straco Corp. (S85) 0.480 0.000 (0.00%) Sunpower Group (5GD) 0.220 0.000 (0.00%) The Trendlines (42T) 0.063 0.000 (0.00%) Totm Technologies (42F) 0.020 0.000 (0.00%) Uni-Asia Group (CHJ) 0.800 -0.010 (-1.23%) Wilmar Intl (F34) 3.150 0.020 (0.64%) Yangzijiang Shipbldg (BS6) 1.740 0.000 (0.00%)
