Sell-Offs Raise Questions in Singapore's Market

Recent earnings reports have sent shockwaves through the Singaporean stock market, making many bullish investors rethink their strategies. Several top stocks within the Straits Times Index (STI) saw significant sell-offs immediately after their financial announcements.

ST Engineering’s Roller Coaster Ride

ST Engineering, the star performer of the STI this year, is a primary example. Despite showcasing a solid 19.7% increase in earnings to S$402.8 million for the first half of 2025, the stock plummeted nearly 6.3% on August 14 following the earnings announcement. These results came on the heels of a remarkable S$9.1 billion in new contracts, bringing its total order book to S$31.2 billion.

Interestingly, analysts from CGS International and RHB revised their earnings forecasts for ST Engineering upward, yet the stock's soaring price had outpaced the earnings growth. After hitting an all-time high of S$8.96 a day before the report, the stock's elevated price-to-earnings ratio of 32 times and a yield below 2% raised alarm bells. Despite a hike in target prices, CGS lowered its recommendation to a "hold," reflecting the stark reality of overvaluation.

Sembcorp and SIA Feel the Squeeze

In contrast, both Sembcorp Industries and Singapore Airlines (SIA) did not fare as well. Sembcorp's earnings dipped by 1.3% to S$536 million, prompting a drastic 13.9% drop in its share price after analysts downgraded their forecasts significantly, citing disappointing contributions from its gas services.

Similarly, SIA’s profit fell nearly 59% to S$186 million despite rising revenues, hitting the stock with a 7.4% decline. Increased costs and an oversaturated market left investors rattled as Maybank slashed earnings estimates for SIA significantly.

Market Resilience Amidst Turbulence

However, not all was doom and gloom in the STI. Some companies outperformed expectations. Yangzijiang Shipbuilding saw its earnings soar by 36.7%, triggering an 8% increase in share value post earnings report. Similarly, Keppel Corporation impressed the market with a solid performance, despite slightly below-par earnings, pushing its stock prices higher.

DBS Group also stood its ground, with shares rising 1.8% after reporting only a minor decrease in earnings, clearly outperforming its competitors. Analysts quickly pushed their target prices above S$50, reflecting stronger than expected financial results.

What’s Next for Investors?

The market's reaction suggests a hunger from investors willing to pay premium prices for strong performances. As companies like Keppel demonstrate effective value-unlocking strategies, the future remains cautiously optimistic. Potential opportunities can be found with property firms such as City Developments Ltd and UOL Group, which are trading at discounts compared to their assets.

On August 13, CDL’s stock surged nearly 7.1% post earnings announcement, showcasing solid property sales and promising asset divestments.

As the Singapore market navigates these fluctuations, the focus will be on how these companies articulate their value propositions and recovery plans to investors eager for strong financials.