More shorting candidates

Shorting candidate #3:

0124 GMT [Dow Jones] STOCK CALL: Merrill Lynch downgrades Singapore Petroleum Co. (S99.SG) to Underperform from Buy to reflect caution over Asian refining sector, margin revisions in 2009-2010; "additionally, we cite the company's accounting complexity and rapidly rising working capital as major risks." Cuts target price to S$2.00 from S$10.00 after changing valuation basis to trough cycle valuation from discounted cashflow model. Expects complex refining margins to fall if Asia heads into recession; "the unusual extent of the profit deterioration in 3Q08 and the lack of catalyst from a sector perspective lead us to recommend investors to exit the stock." Stock down 3.9% at S$2.20. (FKH)

Shorting candidate #4:
0207 GMT [Dow Jones] STOCK CALL: Cazenove cuts SIA (C6L.SG) target price to S$7.00 from S$12.00, reiterates Underperform call following 2Q09 results. Broker says outlook tough, demand for business travel has started to weaken as corporates cut non-essential travel, reduce headcount. Warns, "the decline in SIA's earnings will accelerate to the extent that we now estimate that it will post losses in FY10 and FY11 on the basis that the supply/demand mismatch and yield shortfall are worse than those seen in the Asian financial crisis." Adds while lower oil price brings some relief, it is also a sign of severe deterioration in underlying global macroeconomic conditions. Says new target price is based on multiple of 0.6x FY10 net asset value, equivalent to multiple that stock traded on during Asian financial crisis. Shares down 4.0% at S$10.94. (KIG)