SINGAPORE: Singapore-listed companies turned in a mixed set of results for the final quarter of 2016, but two years of downward expectation revisions could be near an end, analysts said.
Of the 237 companies with December year-ends that had reported their fourth-quarter results as at 9pm on Friday, 172 posted profits compared to 65 that announced losses, or about eight in the black for every three in the red.
Companies that turned in better results for their fiscal fourth quarter outnumbered those that did worse 136 to 98, or about seven up for every five down. Three profitable companies did not have year-ago comparables.
A total of 442 companies reported full-year results for the 12 months ended December. The profitable-to-loss-making split was 304 to 138, or about 11 profitable companies for every five loss-makers. Companies with improved bottom lines nudged out those with worse ones 239 to 200, or about six with better results in 2016 for every five that fared worse.
Credit Suisse investment strategist Suresh Tantia, for whom fourth-quarter earnings were broadly in line with expectations, said: “Earnings downgrades have clearly moderated as post several years of disappointments, analyst estimates for 2017 earnings are grounded on realistic expectations.
“Post-Q4 2016 earnings season, 2017 earnings per share estimates have remained unchanged, indicating the worst is clearly behind us. We expect earnings in the banking sector to show signs of recovery in the second half, coupled with diminishing drag from offshore and marine sector, which should lead to the end of downward earnings revisions for the market.”
The market may have overshot valuations slightly, with the Straits Times Index up 8.4 per cent year-to-date to close at 3,122.34 on Friday, he said.
“My target is 3,050, so I think the market run-up is a little too aggressive,” he said. “I must say I get a bit worried if people are too upbeat on certain things.”
UOB Kay Hian favours “laggard solid stocks with visible earnings and reasonable yield”.
CIMB’s Ms Lim recommended taking profit off the banks, but favoured exporters, US-dollar plays and keeping an eye out for laggards.
