SINGAPORE TECH ENGINEERING LTD (SGX:S63)
ST Engineering - Continues To Deliver
- Solid earnings with 17% rise.
- Strong order book of S$15.3b.
- Defensiveness amidst uncertainty.
17% rise in FY19 net profit
- ST Engineering (SGX:S63) saw a 17% rise in revenue and a 17% increase in PATMI as well to S$578m in FY19, 4% higher than our forecast of S$554m.
- On a segmental basis, net profit for Aerospace was up 10% to S$269m while Electronics was up 2% at S$191m. Net profit for Land Systems rose 46% to S$77m while Marine’s net profit grew 14% to S$52m. Net loss under “Others” narrowed to S$11m from -S$35m in FY18.
Growth in Smart City revenue –
- Smart City revenue totaled S$1.4b in FY19, and was up 40%. This was largely centred around contributions from the Electronics business.
- Management reiterated that the group is on track to reach S$2b per annum in Smart City revenues by 2022.
Continues to secure contracts
- ST Engineering announced a total of S$1.5b new contracts in 4Q19, bringing the 2019 total to S$8b, including S$1b for a unit of Polar Security Cutter in the Marine division.
Change in quarterly reporting
- Pursuant to the amendment of the SGX mainboard listing rules effective 7 Feb 2020, ST Engineering will publish its financial results on a half-yearly basis. The group will also augment its half-yearly results with relevant operating information on a quarterly basis.
ST Engineering a clear outperformer
- On a total returns basis, ST Engineering has outperformed the STI by a wide margin over the past 12 months, with a total return for ST Engineering at 17.0% versus 0.1% for the STI, based on 24 February closing prices.
- ST Engineering has proposed a final dividend of S$0.10/share, bringing the full year to S$0.15/share, same as last year. This translates to a dividend yield of 3.6%, based on 24 February’s closing.
- ST Engineering has been a preferred pick and remains so, given its relatively defensive nature and potential growth.
- Order book as at end FY19 was S$15.3b, with S$5.9b of this to be delivered in 2020. We fine-tune our estimates and our fair value rises slightly from S$4.64 to S$4.70.
- See ST Engineering Share Price; ST Engineering Target Price; ST Engineering Analyst Reports; ST Engineering Dividend History; ST Engineering Announcements; ST Engineering Latest News.
OCBC Research Team
OCBC Investment Research
|
https://www.iocbc.com/
2020-02-25
SGX Stock
Analyst Report
4.70
UP
4.640
