Brokers' take

Singapore market Credit Suisse, March 9

FOLLOWING a 15 per cent cut in consensus FY17E earnings per share (EPS) since January 2016, the Q4-16 results season brought about initial signs of consensus earnings upgrades. Consensus FY17E EPS were raised by 0.1 per cent in February and are flat year-to-date. Reflecting the breadth of the upgrades, 14 out of 27 stocks on MSCI saw an increase in consensus FY17E EPS post results, led mainly by consumer discretionary, consumer staples and financials sectors. There was an equal number of stocks in MSCI SG which raised and lowered their 2016 dividend payout. The Q4-16 results support our view that earnings expectations have bottomed and we could see an inflection in return on equity in 2017. We see further upside to MSCI Singapore despite the recent outperformance, supported by attractive valuation of 1.25 times price-to-book ratio (P/B). While the Industrials sector continued to see cuts to 2017E EPS of 2.7 per cent year-to-date, led by Sembcorp Industries (-6.6 per cent) and Keppel (-4.8 per cent), we expect improving new order prospects, lower impairment risks and significant cost cuts to drive better earnings prospects.

AEM Holdings Ltd | ADD Target price: S$2.69 March 9 close: S$1.66 CIMB Research, March 9