DBS Research Group has revised earnings forecasts for stocks under its coverage up 2% for FY2021 and 3% in FY2022 in anticipation of economic recovery as the global vaccination drive unfolds and business activities pick up. It marks the first time earnings forecasts have been revised upwards since 2Q2019.

The revision follows the 4QFY2020 results announcements season, with the analysts viewing that earnings are on track to recover as economies reopen. Twenty-seven companies under DBS’ coverage reported better-than-expected results compared to seventeen that underperformed.

DBS analysts Kee Yan Yeo and Janice Chua also predict that excluding property stocks, earnings for companies under its coverage will recover back to 97% of pre-pandemic levels by end-2021 with 44.2% FY2021 EPS growth.


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Banks and agricultural products are expected to contribute to earnings uplift. Yeo and Chua have raised forecasted earnings for banks by 7.3% in FY2021 and 7% in FY2022, driven by better net interest margins, better non-interest income outlook for UOB, and higher loans growth for OCBC. Index heavyweight banks should see a 23.2% FY2021 EPS growth. 

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For agriculture, DBS views that First Resources stands to gain from higher crude palm oil (CPO) price trends, while Wilmar will benefit from strong product demand.

On the flip side, forecasts have been lowered for shipyards including Keppel Corporation, Sembcorp Industries, and Sembcorp Marine due to impairments and fair value losses. Earnings for travel players Singapore Airlines and Genting Singapore were also cut in anticipation of slower international travel recovery.

Othe sector standouts include consumer discretionary which is anticipated to have a 608% FY2021 EPS jump due to a low base driven by Genting Singapore and Koufu on resilient domestic and tourist recovery. 

REITs are also forecasted to grow, with a 22% increase in distribution per unit is led by retail REITs Frasers Centrepoint Trust (FCT), Lendlease Global Commercial REIT (LREIT), CapitaLand China Trust (CLCT) and hospitality REITs Ara US Hospitality Trust, Frasers Hospitality Trust (FHT), Ascott Residence Trust (ART) and CDL Hospitality Trusts (CDLHT).

Yeo and Chua also note that the rise in US 10-year yields could consolidate soon, causing a return in interest to REITs and technology stocks, while the recent rally in banks may pause soon. 


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“Top growth stocks yielding more than 20% growth with upside to our target price are iFAST Corporation, ComfortDelgro, Genting Singapore, China Aviation Oil, UMS Holdings, LREIT, and FCT,” the analysts say.

Yeo and Chua are maintaining a Straits Times Index (STI) target of 3,180 points for 2021. 

“The STI now trades at 13.8 times 12-month forward PE. The latest upward earnings revision underpins STI 2021 target of 3,180 that coincides with 14.08 times blended FY2021 and FY2022 PE,” they say.

As at 10.51am, the STI is trading 16.62 points or 0.54% higher at 3,096.34.