> CREDIT SUISSE: It has upgraded its STI target to 3,400 (from 3,038 previously), raising the price-to-book for Singapore from the current 1.49x to 1.68x.
At 1.68x, the price-to-book value is still low versus its historical average of 1.75x since 2000, noted Credit Suisse.
In a report on March 1, the broker noted that, as with other markets, there is a fairly good fit between the STI and US jobless claims which are its proxy for global/US growth.
“This relationship also suggests potential upside for the STI towards 3300-3400.”
Year-to-date, the STI has risen 11% as fears of the Euro crisis receded following liquidity injection by the European Central Bank via LTROs (Long Term Refinancing Operation).
Credit Suisse said Olam, Noble, STX OSV, Keppel and Sembcorp Industries (SCI) "look undervalued".
> Deutsche Bank: It too has raised its target for the STI -- from 3,100 to 3,250.
This is based on FY12 P/E returning to long term averages and 7% EPS earnings growth vs. a zero growth assumption previously.
In a report dated March 2, Deutsche said that as Singapore's economic recovery starts to take shape, prior recovery cycles averaged 16.2x P/E’s, implying c. 18% upside potential.
Its top picks: Sembcorp Industries, Fraser and Neave, and NOL while its top sell is City Developments.
>DBS Vickers: Yesterday (March 6), it said that the market has a potential upside to 3,145 based on average PE of 14.3x.
But first the market is likely to take a much-needed breather, in the absence of earnings upgrades, coupled with rising oil prices which pose risks to economic recovery.
DBS Vickers noted that the market undertone is firm, with support lifted to 2700 or -1 SD (from 2500 at -1.5SD).
"Overall, we cut FY12F earnings by 1.8%, leading to mediocre earnings growth of 6% in FY12F, but growth is expected to accelerate to 13% in FY13F."
Its top picks for the energy sector, which is enjoying benefits of high oil prices, are Keppel (TP: S$12.34), STX OSV (TP: S$2.00), Ezion (TP$1.23) and Sakari Resources (TP$2.70).
> UBS Investment Research: It said it still saw upside with end-12 target unchanged at FSSTI= 3,200 but on a 13-week rate of change, the index looks tactically overbought at 2,900.
In its report dated 26 January, it said 33% of stocks under its coverage has RSI >70.
Its top picks: DBS, Keppel Corp, Olam, CapitaLand, UOL, SingTel, ST Engg.
Least preferred: COSCO, Keppel Land, Tiger, UOB and Wilmar.
