STOCKS NEWS SINGAPORE-Index flat; brokers favour oil and gas stocks

Tue Oct 9, 2012 12:50am EDT

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Singapore shares were little changed, with several brokers saying they continue to favour oil and gas stocks such as Ezion Holdings Ltd as oil prices are expected to remain favourable for exploration and production activities.

The Straits Times Index was up 0.1 percent at 3,079.72 points. The MSCI index of Asia-Pacific shares outside Japan added 0.6 percent.

DBS Vickers said the Singapore market is cheap on dividend yield and price-to-book ratio compared with the rest of the region, but its earnings and return on equity outlook are less attractive.

Yield compression and a slower second half in 2012 are likely reasons to take profit, DBS said. But it noted that the market will continue to be supported by strong yield plays.

Its picks are oil and gas stocks such as Sembcorp Marine Ltd , ASL Marine Holdings Ltd, STX OSV Holdings Ltd and Ezion.

Ezion shares rose as much as 1.9 percent on Tuesday after DBS, DMG & Partners Securities and OCBC Investment Research all said they liked the stock. DMG said it expects Ezion to announce record quarterly core net profit for its third quarter.

Ezion's stock has more than doubled this year versus the 30.5 percent gain in the FT ST Oil and Gax Index.

1241 (0441 GMT)

(Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com; Editing by Prateek Chatterjee)

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10:45 STOCKS NEWS SINGAPORE-DMG sees strong gains in small, midcap oil and gas stocks

DMG & Partners Securities said it believes small and mid-cap oil and gas stocks could continue to outperform the big-caps as investors seek to rotate into smaller cap plays with attractive valuations.

DMG said it likes companies with strong growth profile, track record in delivering profits and management with substantial stake in the company.

The broker's top picks are Ezion Holdings Ltd, Nam Cheong Ltd and Technics Oil and Gas Ltd, which it said are trading at a discount of 25-50 percent to the 2013 fiscal year price-earnings valuations for big-caps.

DMG advised investors to avoid Chinese shipyards with heavy exposure to commercial shipbuilding due to excess capacity, pressure on margins for new orders and deteriorating earnings visibility.

1117 (0317 GMT)

(Reporting by Eveline Danubrata in Singapore; Editing by G.Ram Mohan; eveline.danubrata@thomsonreuters.com)

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10:45 STOCKS NEWS SINGAPORE-OCBC raises target on Frasers Commercial Trust

OCBC Investment Research raised its target price on Frasers Commercial Trust to S$1.31 from S$1.23 and maintained its 'buy' rating, citing the company's possible debt reduction, an expected rise in income and attractive valuation.

Frasers units were up 0.4 percent at S$1.16 on Tuesday. The units have increased 58 percent so far this year versus the 27 percent gain in the FT ST Midcap Index.

With the recent sale of its KeyPoint property to Bayfront Ventures Pte Ltd for S$360 million ($292.7 million), Frasers is likely to sit on net proceeds of S$357.8 million and book in a gain of S$72.8 million, OCBC said.

OCBC noted that Frasers is likely to use the bulk of the sale proceeds to redeem half of its series A convertible perpetual preferred units and reduce its existing debt.

Frasers is also expected to gain from interest savings as a result of the early refinancing of its S$500 million term loan facility at favourable borrowing margins, OCBC said.

It added that Frasers' acquisition of the balance 50 percent interest in Caroline Chisholm Centre and direct tenant leases at China Square Central are likely to contribute positively to the company's rental income.

OCBC said the stock was trading at an "attractive" price-to-book ratio of 0.87 times.

1037 (0237 GMT)

(Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com) ($1 = 1.2301 Singapore dollars)

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