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THE good news is that the bad news might not be as terrible as expected when second-quarter results start being released over the next few weeks.
There may not be the nasty surprises feared a month or so ago while the improved numbers on the general economic front could translate into better corporate earnings and share upgrades for the rest of the year.
Singapore's flash estimate of 20.4 per cent quarter-on-quarter gross domestic product growth beat market consensus by a strong margin and earnings could follow suit, say analysts.
'There will definitely be companies that will come in with better-than-expected (earnings) numbers,' said DMG research head Terence Wong.
'Tech-related companies and manufacturing companies may surprise on the upside, although all that talk about restocking is already pumped into expectations.'
Still, M1, among the first off the mark, said last week that net profit slid 9.7 per cent to $37.1 million. Qian Hu's results will be out today.
Real estate investment trusts (Reits), usually among the first to report results, are expected to turn in some resilient numbers this week.
Deutsche Bank said the outlook for Reits has improved as refinancing risks have receded with the improvement in credit markets. It also expects operating results for the second quarter to hold steady.
JPMorgan also noted that most Reits have largely completed the necessary refinancing, saying 'the sector has by and large sufficiently capitalised', although there could be some 'potential opportunistic raisings'.
Eyes will also be on property developers. They had a poor first quarter with blue chips, including CapitaLand and City Developments, under-shooting analyst estimates.
The property market has shown signs of a revival. Home sales figures for the second quarter are likely to be strong, thanks to new launches in May as well as last month when 1,825 units, a monthly record, were sold.
Pent-up demand, low interest rates and an improved macroeconomic landscape could bode well for earnings over the next few quarters, say analysts.
'We believe the appetite for prime projects is gradually surfacing,' said DMG Research analyst Brandon Lee.
Property prices are still 20 per cent to 30 per cent off their peak in the fourth quarter of 2007, and this should 'ensure a healthy take-up for upcoming prime launches', he added.
Banks were one of the best-performing sectors in the first quarter, with smaller falls in earnings than analysts had feared.
But their readings are still split on banks, which will report results in the first week of next month.
CIMB research head Kenneth Ng expects 'single-digit growth quarter- on-quarter' for bank earnings.
'We expect a quarter of healthy fee income, potential positive surprises from trading gains, strong margins, no loan growth and some book-value recovery. We also expect absolute dividends to be maintained,' he said.
However, DBS Vickers' Lim Sue Lin is 'downbeat on Singapore banks' second- quarter results and does not expect much that could excite momentum'.
'We could see one more quarter of increase in non-performing loans, but (it is) likely to be of a smaller quantum,' she said, adding that all eyes will be on the banks' asset quality in the upcoming results.
The brokerage expects second-quarter earnings for banks to contract 13 per cent quarter-on-quarter and 27 per cent compared with the same period a year earlier.
CIMB analyst Kelvin Goh expects 'a fairly uninspiring Q2' for telcos.
'We see revenues being relatively lifeless owing to stagnating usage patterns and weakness in pressure points of roaming and IDD,' he said.
Despite the varying sector forecasts, there is a general feeling that things have turned for the better.
'Given that the worst is over, we may see more upgrades in earnings,' said Westcomb Securities research head Goh Mou Lih. Upbeat earnings from big companies in the United States such as Intel and Goldman Sachs have also raised hopes of better times ahead, he added.
DMG's Mr Wong said more earnings upgrades could come in the third and fourth quarters after taking guidance from second-quarter results.
But for the market to go on a sustained uptrend, 'economic recovery following signs of bottoming out and earnings upgrades are required', said DBS Vickers, which expects the Straits Times Index to reach 2,800 in the next 12 months.
The brokerage has raised corporate earnings by 5 per cent for this year and 6 per cent for next year.
Credit Suisse, which has an 'overweight' call on the local market, said the results season could drive further earnings upgrades if domestic demand springs a positive surprise.
The property market has shown signs of a revival. Home sales figures for the second quarter are likely to be strong, thanks to new launches in May as well as last month when 1,825 units, a monthly record, were sold.
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