Years of Earnings Underperformance Lead to Singaporean ‘Sell’
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Consensus Recommendations: Singapore
Consensus recommendations on Singapore have gone from a “buy” rating in 2014 and 2015 to a hard “sell” rating in 2016. This may be a consequence of falling earnings results during the last few years.
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Among companies with the most positive recommendations, Venture Corporation is a global electronic manufacturing service company. Analysts expect strong growth in its Test & Measurement/Life Sciences segment.
Among companies with the most negative recommendations, M1 and StarHub are two telecoms that have taken a hit as spectrum auctions have opened up for a new entrant in the Singaporean telecom market. Both stocks are down more than 25% YTD.
Consensus Earnings Estimates: Singapore
From 2012 to 2015, analysts expected earnings to grow by 6% on average, however, actual EPS fell in 3 out of those 4 years.
Among companies with the highest consensus earnings growth, First Resources focuses on palm oil: everything from plantations to refinery and processing. Analysts expect the company’s refining margins to improve. Price has gained more than 20% in the past 6 months.
Sembcorp Marine builds, repairs and upgrades rigs and platforms used in the oil industry. The poor outlook is due to weak demand that follows low oil prices.
Consensus Target Prices: Singapore
Consensus target price expected return is now in the double-digits. Looking back, the estimated upside hasn’t been very accurate though. Estimates have overstated actual returns in 4 out of the last 5 years.
Noble Group is focused on supply chain logistics. The company’s high upside is explained by a fall in its share price of 80% in the past 2 years rather than any high growth expectations.
Singapore Press Holdings is feeling the tough climate for traditional media and has seen its ad revenue decline. Total revenue has been falling since 2012. Its share price has fallen by 10% YTD.
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