Singapore-listed companies presented a rosy report card for the first-half financial results, chalking up higher profits than a year before.

A total of 472 companies released their financial results for the six months ended June 30, with 412 of them, or 87.3 per cent, posting profits. Among them, 261 firms reported higher profits than a year ago.

For the 459 companies that have a year-ago comparison, they raked up total profits of $20.9 billion, 39 per cent higher than the same period last year.

The April-June quarter also tossed out more positive than negative surprises, with most firms reporting earnings either meeting or exceeding expectations, prompting analysts to re-rate their earnings forecasts on most sectors, with the exception of the tech universe.

But when the robust local reporting season collided with the battering sub-prime mortgage crisis in the US, the latter called the shots in the stock market here and elsewhere, sending stampeding bears all over.

'The current market sell-down runs contrary to the state of corporate earnings,' CIMB-GK analyst Kenneth Ng said in a note.

When benchmarked against Citi's earnings projections, 63 per cent of the companies in its coverage met expectations for the April-June quarter, up from 58 per cent in the January-March quarter; 28 per cent exceeded expectations, up from 24 per cent in the preceding quarter; and only 9 per cent disappointed, about half that a quarter ago.

'The slight increase in the proportion of companies meeting expectations reflects, in our view, the underlying stability in the core earnings of companies under our coverage and the strong economic fundamentals,' Citi analyst Lim Jit Soon said in a recent note.

Higher lending activity and soaring fee income saw the three local banks post sharp rises in core net profit in the second quarter, though their share prices had recently borne the brunt of concerns over investments in collateralised debt obligations (CDOs).

OCBC Bank's core net profit grew the fastest, rising 65 per cent year-on- year to $518 million, UOB's grew 32 per cent to $585 million, while DBS's net profit rose 21 per cent to $664 million. Their net profits attributable to shareholders for the quarter fell due to one-time items.

Prior to the market sell-down, frenzied trading in various financial instruments allowed Singapore Exchange to enjoy a robust fourth quarter ended June 30. Its net profit from its operations doubled to $110.8 million, and including write-back of allowance for impairment and gain on disposal of SGX Centre, surged 220 per cent to $176.3 million.

The robust economy also bolstered earnings at SingTel, which posted a 10.4 per cent gain in net profit to $927 million for its first quarter ended June 30, as mobile phone sales and business demand grew.

Underpinned by strong order books, SembCorp Industries and Keppel Corp also delivered sterling second-quarter results, with net profit surging 50.7 per cent to $129.6 million and 32 per cent to $258.39 million respectively.

But of the tech firms that surprised on the downside, Creative Technology saw its net losses during the fourth-quarter ended June 30 widened to US$19.3 million, from US$12.7 million a year ago as its sales in the US fell.

Encouraged by the slew of positive news from a majority of the companies here, CIMB-GK raised its fiscal 2007 core EPS growth estimate for the primary sector - comprising banking & finance, manufacturing, multi-industry, property, telco and transport & logistics - from 18.2 per cent to 22.5 per cent, upon upgrading its earnings estimates for telcos, banks and multi-industries.

Citi raised its market EPS growth forecast for 2007 to +19.3 per cent from +14 per cent, as it lifted earnings estimates for the property developers to reflect higher selling prices, for conglomerates to factor in stronger order books, as well as for OCBC to price in improving margins and fee growth.

Analysts noted that it is still early days to conclude if the current credit turmoil caused by the US sub-prime crisis will eventually have an impact on the 'real' economy, and whether the earnings per share of companies would be at risk.

But with fundamentals staying firm for now and valuations having been forced down by the recent market slump, some analysts believe there could be buying opportunities waiting to be uncovered.

'We think the latest sell-down is starting to make Singapore an attractive market again, but we do not think the selling is quite done yet,' Mr Ng said, advising investors to bottom-fish at another 4-6 per cent downside from the current level while keeping his Straits Times Index target of 3,780, which implies 16.8 times 12-month rolling PE.

In keeping with a defensive strategy given increased risk aversion in the market, Mr Lim of Citi also recommends media and telecoms stocks like SPH, SingTel and StarHub for their strong recurrent cash flows and attractive dividends as well as other yield plays like Rickmers, SATS and Suntec Reit.

Common top picks of CIMB-GK and Citi include Keppel Corp, DBS Group and StarHub.