June 7, 2012 / 6:11 AM / 7 years ago

STOCKS NEWS SINGAPORE-Index flat; SingTel outperforms

Singapore shares were little changed by midday, but Southeast Asia’s largest telecom firm Singapore Telecommunications (SingTel) outperformed the market, rising to a more than two-week high.

By midday, the Straits Times Index (STI) was flat at 2,762.00 points, while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.8 percent.

UOB Kay Hian said the STI was not expensive at a price-earnings ratio (PE) of 12.6 times for fiscal year 2012 - a 24 percent discount to the index’s long-term PE mean of 16.6 times since 1993 - but it saw no near-term catalyst as investors remain on the sidelines.

It advised investors to seek shelter in resilient domestic plays such as Singapore Press Holdings and M1 Ltd , as well as stocks with high dividend yields such as Suntec REIT and Cache Logistics Trust.

SingTel shares rose as much as 1 percent to S$3.14, its highest since May 22.

“SingTel’s decision to cut data caps for smartphones is a big step toward better data monetisation opportunities for Singapore telcos,” Maybank Kim Eng said.

But the broker said the short-term impact will be minimal as the majority of 3G data users do not exceed two gigabytes of data a month and SingTel faces significant risks overseas, particularly on the currency and regulatory fronts.

1336 (0536 GMT) (Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com)

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11:43 STOCKS NEWS SINGAPORE-OCBC cuts Ascendas REIT target price

OCBC Investment Research lowered its target price on shares of Ascendas Real Estate Investment Trust, which owns industrial properties, to S$2.22 from S$2.31 but kept its ‘buy’ rating.

Units of Ascendas REIT were down 1 percent at S$2.00, while the FT ST Mid Cap Index was nearly flat. The stock has risen around 9 percent so far this year, matching the gain in the index.

OCBC said it factored in an enlarged unit base following Ascendas REIT’s unit placement and an expected loss in income after the firm sold one of its properties, partially balanced out by lower interest expenses from fewer borrowings.

Despite market concerns that industrial rents may ease slightly in 2012, OCBC said it saw upside potential for Ascendas REIT’s rents that are due for renewal. This should support the estimated distribution per unit yield of 6.9 percent for the firm’s 2013 fiscal year, which OCBC said is attractive.

OCBC added that Ascendas REIT’s stronger financial position will likely give it a greater ability to tap on growth opportunities, as well as secure borrowings at potentially more competitive terms to fund its committed investments.

For a related story, click

1132 (0332 GMT)

(Reporting by Leonard How in Singapore; leonard.how@thomsonreuters.com)

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11:27 STOCKS NEWS SINGAPORE-Macquarie upgrades Keppel Corp to outperform

Macquarie Research raised its rating on Keppel Corp , the world’s largest rig-builder, to outperform from neutral, citing cheap valuations and a strong order pipeline.

Shares in Keppel and rival Sembcorp Marine Ltd have underperformed the market over the past two months on concerns of a weak outlook as oil prices weaken.

Macquarie said both Sembcorp and Keppel are now trading at 10 to 11 times one year forward price to earnings and at large discounts of about 20 percent to their five-year mean multiples on price to book.

It said firms ordering rigs in the current industry upturn had better credentials allowing them access to funding despite the credit squeeze. Macquarie said deepwater projects can remain profitable as long as Brent crude oil stays above $75 a barrel.

Keppel shares are still up 7 percent so far this year, while Sembcorp Marine has risen more than 14 percent versus a 4.5 percent rise in the Singapore’s benchmark index.

(Reporting by Harry Suhartono in Singapore; harry.suhartono@thomsonreuters.com)

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09:58 STOCKS NEWS SINGAPORE-UOB raises Ezion target to S$1.42

UOB Kay Hian raised its price target on the stock of offshore services provider Ezion Holdings to S$1.42 from S$1.34 after the firm won a third service rig contract worth $86.3 million.

Ezion shares were up 0.65 percent at S$0.780 at 0145 GMT, outperforming the FT ST Small Cap Index, which was up 0.3 percent. The stock has risen 19 percent so far this year, outperforming a 6 percent gain in the index.

The charter contract is for four years with total revenue at $86.3 million or $21.6 million per year, and UOB estimates the project to yield a net profit of $7 million, adding 7 percent to its 2013 and 2014 earnings forecast. The broker said the customer is Mexico’s Pemex.

The project also has a “very high” return on equity (ROE) of 42 percent, well above Ezion’s minimum project ROE requirement of 30 percent, said UOB and maintained its ‘buy’ rating on the stock.

The broker added that it expects Ezion’s share price to benefit from a ramp-up in earnings as more liftboats and service rigs come onstream and demand is seen strong.

For a related story, click link.reuters.com/fuj68s

Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com

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