Sembcorp, DBS seen exceeding Q4 forecasts: report

Downside risks are anticipated for companies such as Wilmar International, and Singapore Exchange.

The 4Q24 earnings season will likely see around 80% of covered companies reporting results in line with forecasts, with Semcorp Industries, and DBS Group amongst others expected to exceed projections, CGS International said.

In its strategy note, CGS International said some companies are projected to exceed expectations, including Sembcorp, Seatrium, iFast Corporation Ltd., DBS, Frasers Logistics & Comm. Trust, Keppel DC REIT, SingTel, and Singapore Airlines.

 On the other hand, downside risks are anticipated for companies such as Wilmar International, Singapore Exchange, CDL Hospitality Trust, ESR-REIT, and Far East Hospitality Treat.

In the capital goods sector, industrials are expected to show improved earnings in the second half of 2024. Companies like Yangzijiang Shipbuilding, Keppel, and ST Engineering are forecasted to benefit from higher gross margins and strong order wins.

Sembcorp may experience seasonal weakness in its renewable energy segment, but this could be offset by stronger performance in its gas and related services. Seatrium is expected to secure $14.4b in order wins with an improved gross margin of around 7%.

Additionally, ST Engineering is likely to report stronger profits due to lower finance costs and a turnaround in its urban solutions segment.

The banking sector presents a mixed outlook, with seasonal softness in earnings expected for 4Q24. DBS is likely to experience a slight expansion in its net interest margin (NIM), whilst OCBC and UOB might face slight declines.

The financial provider said fee momentum and wealth management income could slow down in this quarter. Despite this, the banking sector remains attractive as a dividend play, offering yields of approximately 5-5.6% for FY25.

In the REITs sector, mixed performance is anticipated. Factors such as high occupancy rates, positive rental reversions, and acquisitions may drive topline growth. However, higher interest expenses could partially offset these gains, impacting distribution per unit.