Today’s Focus

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growth on weak footing.2Q results to reflect weak quarter 2013’s 14% earnings

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downgrade Venture to Hold, TP reduced to S$8.15 and

World Precision to Fully Valued, TP cut to S$0.43.

We expect this coming 2Q results to be weak, therefore our

14% earnings growth for 2013, which is largely driven by

rebounds in cyclical sectors where growth is dependent on

external economies, is on weak footing. For this upcoming 2Q

results season, we have factored a 2.5% earnings downgrade.

We expect the STI to range trade from 2800 (-1 SD blended

FY12/13F PE) to 3100 (-0.5 SD blended FY12/13F PE) for

3Q12, with re-rating potential towards the average blended

FY12/13F PE level (STI target of 3300) only if macro

uncertainties ease.

We have highlighted 4 themes to beat the range bound index.

1. High conviction growth stocks with highly visible,

sustainable earnings growth of at least 10% and minimal

risks to earnings downgrades. These are stocks with

growth backed by medium term charters (Ezion), or

earnings at inflexion point from past investments

(Bumitama and CMA), companies with steadily growing

businesses – OCBC and SembCorp Industries. Stocks

riding on Asian consumption theme are CMA, Capitaland,

OCBC, and SembCorp Industries..

2. Beneficiaries of China’s fiscal stimulus – Hyflux, Sound

Global and Midas.

3. Steady and sustainable yield plays with growth. Yield

plays have outperformed. We are now more selective,

focusing on those which generates growth and offers

better yield like Frasers Commercial Trust, Hutchison Port

Trust, Mapletree Commercial Trust, Mapletree Log and

Suntec REIT.

4. Stocks which have fallen out of favour but with upcoming

catalysts to spur recovery, like Midas, Tiger Airways, China

Fishery and Biosensors.Technology sector - Macro headwinds derailing recovery