Strategy / Earnings Review: CIMB downgrade STI to Neutral from Overweight, although FSSTI target is unchanged at 3,560. Note that 1Q11 season disappointing and headwinds are looming from rising costs with sales growth losing traction. Globally, US growth appears to have slowed while EU debt concerns are resurfacing. House deem its time to pare down its 2yr old Overweight position on SG……
Add that SG market lacks growth, with conglomerates and ppty Co’s possibly at peak profits now. Banks may find it hard to lift profits meaningfully in low i/r envt, while Telcos face competition and Transport struggling with high fuel costs. adFew growth options in SG are Genting SP, Noble, Olam, DBS and possibly 2nd tier O&M plays. SG’s limited growth opportunities but strong balance sheets, seen in div surprises at SingTel, SIA, SIA Engineering and SATS…..
House top picks for large Caps are DBS, F&N, Noble, SIA, OUE, SembCorp Industries and Wilmar, while top small-midcap picks are CWT, Ezion, FCOT, Midas, STX OSV, OKP, UMS and Foreland Fabritech.
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