UOB KayHian forecasts market earnings per share to grow at a slower clip of 0.4% year-on-year in 2016, down sharply from 8.9%, following a lacklustre earnings reporting season in 4Q2015.
The cut is mainly attributable to the risks present in the banking, oil services and property sectors, even though these sectors delivered firm results.
UOB KayHian says the lower forecast reflects higher credits cost in 2016 as bank asset quality deteriorates on oil and gas exposure, as well as selected corporate loans in the region.
The research house also reduced its earnings forecast for the oil services sector to -2% in 2016 from 42% to account for lower charter rates and lower utilisation.
In 4Q, 24% of companies covered by UOB KayHian missed expectations while the rest were mainly in line.
"We believe the outlook is likely to be challenging, given the weak external outlook and investor concerns," UOB KayHian analyst Andrew Chow writes in a note dated March 3.
Still, UOB KayHian advises investors to stay "selective" amid the uncertain external outlook. It recommends "buy" for DBS Group, City Development, K-REIT, ComfortDelGro, SingTel, SingPost, Raffles Medical and Ascott REIT.
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The cut is mainly attributable to the risks present in the banking, oil services and property sectors, even though these sectors delivered firm results.
UOB KayHian says the lower forecast reflects higher credits cost in 2016 as bank asset quality deteriorates on oil and gas exposure, as well as selected corporate loans in the region.
The research house also reduced its earnings forecast for the oil services sector to -2% in 2016 from 42% to account for lower charter rates and lower utilisation.
In 4Q, 24% of companies covered by UOB KayHian missed expectations while the rest were mainly in line.
"We believe the outlook is likely to be challenging, given the weak external outlook and investor concerns," UOB KayHian analyst Andrew Chow writes in a note dated March 3.
Still, UOB KayHian advises investors to stay "selective" amid the uncertain external outlook. It recommends "buy" for DBS Group, City Development, K-REIT, ComfortDelGro, SingTel, SingPost, Raffles Medical and Ascott REIT.
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