Markets Insights

Positive mood with earnings results, economic data due

The latest earnings reporting season has begun amid hopes that company results will show more positive signs after a bumpy year.

Among the companies slated to release results in the days ahead are CapitaLand and Keppel Corp, as well as their affiliated trusts, and Singapore Exchange (SGX).

CapitaLand's shares last week closed unchanged from the previous trading day at $3.68, while Keppel Corp ended down two cents at $6.91.

SGX will table its third-quarter results on Thursdayand CIMB analyst Jessalynn Chen sees reasons to be optimistic.

Ms Chen expects a net profit of $90 million for the three months to March 31, up 1 per cent from a year ago on higher securities trading activity and listing fees, which made up for lower derivatives volumes. The outlook is positive in the coming quarters.

"We expect higher securities average daily volume traded, cost discipline and more initial public offerings to drive medium-term earnings growth," Ms Chen said in a recent note, maintaining her buy call for the bourse with a $8.09 target price. SGX shares last closed at $7.53.

TECH DEMAND BOOST

The upswing in global tech demand is a boon for Singapore's electronics manufacturers, with exports of integrated circuits and semiconductors increasing rapidly in recent months. This is also helping the precision engineering sector, which is focused on producing electronics-related equipment.

MOODY'S

CapitaLand Commercial Trust will announce its first quarter results on Wednesday, followed by CapitaLand Mall Trust on Thursday.

Today, investors will also find out how Keppel DC Reit and Keppel Infrastructure Trust (KIT) fared in the first quarter.

KIT's portfolio comprises fully owned infrastructure assets such as City Gas - Singapore's sole producer and retailer of piped town gas - and the Senoko Waste-to- Energy Plant.

"The portfolio holds organic growth potential, while the balance sheet has dry powder to consider acquisitions up to $1.5 billion as well," Maybank Kim Eng analyst Neel Sinha said.

He added: "KIT trades at a prospective dividend yield of 7.02 per cent versus 6.04 per cent for the Singapore real-estate investment trusts index and 8.67 per cent for Singapore business trusts. The net profit forecast for the 2017 financial year is for 8.8 per cent growth."

Investors have been similarly expectant, pushing KIT's share price up 8.2 per cent over the past month to 53 cents at last close.

Alongside company results, more Singapore economic data is also due to be released.

March non-oil domestic exports - out today - have likely grown 15 per cent year on year after February's 21.5 per cent expansion, according to Moody's forecast.

"The upswing in global tech demand is a boon for Singapore's electronics manufacturers, with exports of integrated circuits and semiconductors increasing rapidly in recent months. This is also helping the precision engineering sector, which is focused on producing electronics-related equipment," Moody's said.

Singapore's gross domestic product grew a less-than-expected 2.5 per cent in the first quarter, Ministry of Trade and Industry flash estimates showed last week, even as the Monetary Authority of Singapore kept its exchange-rate policy unchanged.

The United States dollar also came under the spotlight briefly after the greenback weakened last week as the market reacted to US President Donald Trump's comments that his country's currency is getting too strong.

One American dollar can now buy about S$1.40.

"The Singdollar could stay resilient in the near term but we retain an outlook for eventual US$-S$ recovery to 1.45 in 12 months' time," said Bank of Singapore currency strategist Sim Moh Siong.


Correction note: An earlier version of this story said CapitaLand would be releasing its first quarter results on Friday. This is incorrect. It is slated to be released in the days ahead. 

A version of this article appeared in the print edition of The Straits Times on April 17, 2017, with the headline 'Positive mood with earnings results, economic data due'. Print Edition | Subscribe