Last Updated: Tue, Nov 27, 2012 06:10 hrs

Citigroup upgraded Singapore banks United Overseas Bank Ltd to 'buy' from 'sell' and Oversea-Chinese Banking Corp to 'neutral' from 'sell', citing favourable valuations if net interest margins stabilize and macro data improves in the coming quarters.

While low interest rates and the U.S. Federal Reserve's latest round of quantitative easing will cap improvements in net interest margins, they may help banks generate healthy treasury and markets income, allowing provisions to remain below normalised levels.

Citi prefers UOB, which has experience dealing with balance sheet issues and looks well positioned to capture fee growth opportunities in the region. It raised its target price for UOB to S$20.30 from S$18.10.

Both OCBC and UOB need to drive higher contributions from its franchises in Southeast Asia to mitigate pressure on net interest margins, Citi said, increasing its target price for OCBC to S$9.75 from S$9.15.

By 0547 GMT, UOB shares were up 1.2 percent at S$18.26, and have gained 19.6 percent since the start of the year. OCBC rose 0.8 percent to S$9.22, and is up 17.8 percent since the start of the year, against the Straits Times Index's 13.7 percent gain.

1349 (0549 GMT)

(Reporting by Charmian Kok in Singapore; Editing by Sunil Nair; ************************************************************

13:39 STOCKS NEWS SINGAPORE-China Fishery, Pacific Andes fall on poor results

Shares in China Fishery Group Ltd and related company Pacific Andes Resources Development Ltd fell after both companies posted weaker-than-expected quarterly results.

China Fishery, which is part-owned by Pacific Andes Resources, fell 13 percent to S$0.595, while Pacific Andes dropped 8 percent to S$0.137. China Fishery has plunged nearly 35 percent since the start of the year while Pacific Andes has fallen 21.5 percent.

China Fishery posted a fourth-quarter net loss of $15 million compared with a profit of $0.8 million a year ago. Pacific Andes Resources made a net profit of HK$627.7 million for the year ended September, a slight increase from HK$622.8 million last year.

DMG & Partners downgraded China Fishery to 'neutral' from 'buy' and cut its target price to S$0.65 from S$1.00, citing disappointing fourth-quarter results due to poor performance in its fleet operations.

Going forward, the brokerage expects China Fishery's shares to be weighed by poor earnings visibility from its fleet and Peru fishmeal business. It lowered its 2013 earnings estimates for China Fishery by 46 percent.

OCBC Investment Research downgraded Pacific Andes Resources Development, citing earnings that were below expectations in the fourth quarter, due to poor results at China Fishery.

Average selling price also fell 3 percent, leading to a sharp decline in operating margins, which dropped to 6.4 percent in the fourth quarter, compared with 10.2 percent a year ago.

"The key challenge is the lower activity in the South Pacific, which is unlikely to pick up any time soon," said OCBC, adding that a cut in fishing quota in Peru for the upcoming fishing season will also hurt both companies.

1322 (0522 GMT)

(Reporting by Charmian Kok in Singapore; Editing by Anupama Dwivedi;


9:55 STOCKS NEWS SINGAPORE-OCBC cuts Keppel target price

OCBC Investment Research cut its target price for rigbuilder Keppel Corp Ltd to S$12.49 from S$13.34 and kept its 'buy' rating, citing lower operating margins in the offshore and marine segment as well as lesser property earnings.

By 0146 GMT, Keppel shares were flat at S$10.50, and have jumped 12.9 percent since the start of the year, compared with a 13.8 percent rise in the Straits Times Index.

After securing S$8.8 billion of orders in the first nine months of the year, Keppel's net order book was S$13.1 billion, with deliveries extending to 2019, OCBC said.

"Looking ahead, we are expecting new order wins of about S$5 billion in 2013 from the Caspian Sea, West Africa, Brazil and other regions," the brokerage noted.

It said Keppel has also started to improve the competencies and productivity of its regional yards to meet heavier workload requirements, which will allow more work to be outsourced to them.

0947 (0147 GMT)

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