With STI currently trading at 14.1x (average) FY13F PE and the current reporting season yet able to produce a meaningful upward revision in forward earnings forecast, we see increased likelihood that the STI has met near-term resistance at 3313. A consolidation in coming weeks is possible that can result in a test of the 65-day EMA at c.3200 before STI resumes its climb. Despite the likelihood of a short-term consolidation, STI's long-term rising trend remains intact that can lift it to 3600 by year-end.

Planters may underperform regional indices this year; with CPO prices expected to remain subdued. Our analyst has cut CY13F-14F CPO prices by 10-11%. We no longer see significant rebound in CPO prices this year, given huge inventory carryover from last year. Soybean oil price premium hence may not narrow as fast as we previously expected. 4QCY12 earnings are expected to drop 1-34%; except for Bumitama Agri and Wilmar. Switch to First Resources (raised to BUY from hold, TP: S$2.16) for exposure. We believe YTD selldown has been overdone; and expect near term arbitrage opportunity. Bumitama Agri is cut to HOLD, target price reduced to S$1.20 from S$1.25. Though Bumitama is still the best of the bunch, share price has performed well. Wait for better entry point.

Singapore's non-oil domestic exports rose in January, but at a slower pace than expected, as non-electronic exports managed a slim recovery while electronic shipments continued their slide. NODX rose 0.5% y-o-y in January, below market forecast of 2.6% growth, and after falling 16.3% in December. Compared with the previous month, exports fell 1.8% in seasonally adjusted terms, vs market projection of 8.5% month-on-month expansion, and after contracting 4.2% m-o-m in December. Electronic exports continued to decline, but at a slower pace than in the previous two months. In January, electronic shipments fell 5.6% y-o-y, after plunging 19.1% in December. Non-electronic shipments grew 3.8%, compared with a 14.8% fall last month, buoyed by a 28.2% rise in petrochemicals. Pharmaceutical exports fell 22.9%, after sliding 11.5% in the previous month.

Shipments to the European Union, its biggest export destination, fell 18.4% y-o-y in January, compared with a 7.3% y-o-y fall in the previous month. Exports to the U.S. fell 14.1% y-o-y after falling 27.7% in December. Exports to China, however, grew 18.0% after decreasing 1.2% in the previous month.

January total primary private home sales was up 0.4% m-o-m, however, excl ECs, take up surged 43% m-o-m to 2013 units, the highest transactions in 4 months and 6% higher than the average monthly average seen last year. The strong demand was recorded largely in the first half of the month (prior to govt cooling measures) and extensive price rebates from developers after the cooling measures. We expect a quieter February, and maintain projection for a 5% drop in prices this year. Top picks are CapitaMalls Asia and Capitaland. We prefer developers with the ability to unlock asset value.

The government will announce the FY13 budget on 25 Feb (next Monday). This budget will focus more on longer-term challenges than short-term risks to the economy. Specifically, to sustain longer-term growth given an aging population and the moderation in labour growth, productivity improvement and fostering inclusive growth will continue to take centre-stage in this budget. Concrete medium-term measures to improve public infrastructure will also be introduced to ease some of the current bottlenecks. We expect many measures to help companies offset the transition costs from the ongoing restructuring and to boost productivity. For households, an outright cash handout or a generous special transfer package will be visibly lacking in this budget.

ST Engineeringreported FY12 net profit of S$576m (+9% y-o-y) in line, and final dividend of 13.8Scts (FY12: 12.5Scts). We see upside to end-FY12 orderbook of S$12.1bn from recent Singapore navy contract. MRO revenues recovering; potential for upside surprise from pick up in US operations Valuations have not peaked; maintain BUY with higher TP of S$4.40 (Prev S$ 3.80).

Indofood is subscribing for 98m new shares, representing 14.95% stake in China Minzhong at S$0.915 per share. The business synergies between the two listed food companies open the door to potential regional collaborations in future. Net proceeds of approximately S$85m will be used for building new industrial farming capacities and working capital purposes.

SIA's systemwide passenger carriage grew 3.4% against a 1.7% increase in capacity. As a result, passenger load factor (PLF) improved by 1.3 percentage points to 78.3%. The number of passengers carried increased by 2.5% to 1.5 million. Sytemwide PLF improved across all regions with the exception of South West Pacific where growth in demand was outstripped by the increase in capacity. Passenger yields are likely to continue to come under pressure due to promotional fare activities. Overall cargo traffic grew 3.0% y-o-y, while capacity decreased by 0.8%, resulting in a 2.2 percentage-point increase in overall cargo load factor.

December's retail sales for Singapore fell 1.5% y-o-y, below consensus forecast of a 0.2% growth. It was dragged down by weaker sales of motor vehicles, which, if removed from the equation, leaves retail sales dipping 0.4% y-o-y. On a month-on-month basis, December retail sales slipped 0.9%, also below the consensus of a 0.6% growth. If vehicle sales are excluded, retail sales declined 0.8% m-o-m. Motor vehicle sales in December fell 1.1% m-o-m. Compared to December 2011, motor sales fell 6.1%. Retail sales of telecommunications apparatus and computers fell the most year-on-year - 12.1%. Sales of recreational goods, petrol service stations, apparel/footwear and optical goods/books fell by between 1.5% and 2.4%.

Source: DBSV