MORE Singapore stocks met analysts' expectations in the third quarter than in the previous quarter, suggesting that the potential for upward revisions to market earnings growth may be limited, Citigroup Global Markets said.

Stocks which beat expectations included property-related ones such as City Developments, Fraser and Neave and Wing Tai.

Citigroup said that 66 per cent of the stocks of listed companies met expectations in Q3, compared with just 63 per cent in the second quarter.

And 26 per cent of the stocks exceeded expectations, down from 28 per cent.

Stocks which beat expectations included property-related ones such as City Developments, Fraser and Neave and Wing Tai. And conglomerates which met expectations included Keppel and ST Engineering.

Citigroup revised its year-end Straits Times Index (STI) target for 2007 to 3,600, from 3,483. It also expects the STI to hit 4,000 next year, up from 3,800.

Citigroup lifted market earnings per share (EPS) growth forecast for this year to 22.4 per cent from 20.8 per cent at the start of the reporting season.

But for next year, it lowered the growth forecast to 12.2 per cent from 12.9 per cent.

Citigroup said that the risks next year would be the impact of higher wage and input costs and potential foreign exchange translation losses arising from a weaker US dollar.

CIMB expects an EPS growth of 22.2 per cent this year, lower than the forecast 24 per cent before the Q3 results.

But it raised its EPS growth forecast for next year to 22.3 per cent from 20.7 per cent.

Citigroup is bullish about telcos, banks and conglomerates, preferring stocks with good visibility and attractive yields.

Its report said that conglomerates continue to do well, underpinned by strong order books.

Strong performance should continue on the strength of order books and earnings momentum, it said.

Citigroup's top picks include Singapore Press Holdings, ST Engineering, Keppel Corp, DBS, SingTel and Rickmers Maritime.

It is neutral on property and gave an 'underweight' call on transport, technology, consumer staples and healthcare.

CIMB's top picks also included conglomerates and banks such as Keppel and DBS.

Valuations for DBS are 'now very depressed' and the stock will do well once huge collateralised debt obligations write-downs in the banking arena peak out later, CIMB's report said.

CIMB said that against rising inflation, energy-related stocks such as China Energy and stocks with pricing power such as Singapore Airlines (SIA) are 'safe havens'.

It said that SIA continued to demonstrate an ability to pass through higher fuel costs through fuel surcharges, unlike SMRT which looks 'somewhat vulnerable'.

As for the smaller cap stocks, CIMB is bullish on construction stocks such as Tat Hong.

'Even as property sector sentiment weakens, the backlog of construction projects and the shortage of qualified contractors translate into a good two years for the sector,' its report said.

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