Sheng Siong shares fall 2.1% after Maybank downgrade, target price cut

Several Singaporean companies received downgrades from analysts recently, including OCBC, Sheng Siong and the Singapore Exchange (SGX). Analyst Hussaini Saifee from Maybank lowered Sheng Siong's stock to "hold", resulting in a more than 2% drop on October 12. Despite acknowledging Sheng Siong's strong performance due to resilient consumption, market share gains, and targeted vouchers, Saifee noted that support is weakening as assistance shifts to GST vouchers and cash payments.

He also pointed out that supermarket growth has slowed to low single digits, tracking underlying income and population trends instead of the "unusually favourable" conditions observed recently. Saifee highlighted potential challenges such as consumers crossing the border into Malaysia due to new transit links or shopping online, which may impact Sheng Siong's performance. He lowered the target price to $3.12 from $3.22.

Citi analyst Tan Yong Hong downgraded OCBC to "sell" and suggested selling UOB, while keeping DBS at a "buy" recommendation. He attributed the downside earnings risks to OCBC to market optimism on Singapore dollar rates and exceptional first-half wealth-related income, particularly for banks enjoying a three-year re-rating cycle since 2024.

Tan warned that Singapore banks may face risks from higher funding costs due to the rising long bond yields and potential repricing of fixed-rate loans. Despite the downgrades, all three banks experienced share price gains on October 12 - DBS rose 0.8% to $73.94, OCBC 0.2% to $29.06, and UOB gained 1.4% to $40.50. Additionally, Macquarie analysts downgraded SGX to "underperform" from "neutral" earlier, citing waning monthly statistics and the potential impact of improved economic outlook or a slowdown on the exchange.