9M12 results were in line with our expectations, with earnings per share of 13.79 S cents (on a fully diluted basis) forming 76% of our FY12F estimate of 18.2 S cents. 3Q12 revenue rose 11% YoY to S$1.542b, EBIT climbed 9% YoY to S$167.6m, PBT increased by 11% to S$184.7m and net profit rose 9% YoY to S$146.4m. Commercials sales formed 65% of total sales in 3Q12, up from the 62% for 3Q11. PBT margins for the four main sectors remained flat, at most +1/-1 ppt versus 3Q11's figures. The group maintained the PBT margin of 12% which it had in 3Q11 and 2Q12. STE expects to achieve higher revenue and PBT for FY12 over FY11. Land Systems (ST Kinetics) has secured a contract to supply a TERREX armoured personnel carrier for the demonstration phase of the U.S. Marine Corps Marine Personnel Carrier programme. Rolling forward our model, we raise our fair value from S$3.81 to S$3.90 and maintain a BUY rating.
Overall solid results as expected
3Q12 results were in line with our expectations, with earnings per share of 13.79 S cents (on a fully diluted basis) for 9M12 forming 76% of our FY12F estimate of 18.2 S cents. 3Q12 revenue rose 11% YoY to S$1.542b, EBIT climbed 9% YoY to S$167.6m, PBT increased by 11% to S$184.7m and net profit increased by 9% YoY to S$146.4m. Commercials sales formed 65% of total sales in 3Q12, up from the 62% for 3Q11.
Sector performance
Among the four main sectors, Land Systems registered the highest increase in revenue of 27% YoY to S$391m, due to higher project deliveries in Automotive and Munitions & Weaponry. Electronics' revenue rose 10% YoY to S$341m and PBT improved 11% to S$40.1m. Aerospace's revenue climbed 9% YoY to S$505m; PBT was up 3% to S$85.3m. Marine saw revenue decline 7% YoY to SS$236m which was mainly due to lower shipbuilding revenue related to lower revenue recognition from contracts. PBT dropped 3% YoY to S$30.4m. PBT margins for the four main sectors remained flat, at most +1/-1 ppt versus 3Q11's figures. The group maintained the PBT margin of 12% that it had in 3Q11 and 2Q12. STE expects to achieve higher revenue and PBT for FY12 over FY11.
TERREX, U.S. Marine Corps personnel carrier programme
Land Systems (ST Kinetics) has secured a contract through Science Applications International Corporation to supply a TERREX armoured personnel carrier for the demonstration phase of the U.S. Marine Corps Marine Personnel Carrier programme. The TERREX will be put through a 12-month period of performance trials. There are three others who have been selected for this phase. As of end Sep, STE's order book stood at S$12.5b, of which about S$1.4b is expected to be delivered in 4Q12. Although the order book represents a slight dip from S$12.7b as of end Jun, it is still at a very healthy level.
Maintain BUY
Rolling forward our model, we raise our fair value from S$3.81 to S$3.90 and maintain a BUY rating.
3Q12 results were in line with our expectations, with earnings per share of 13.79 S cents (on a fully diluted basis) for 9M12 forming 76% of our FY12F estimate of 18.2 S cents. 3Q12 revenue rose 11% YoY to S$1.542b, EBIT climbed 9% YoY to S$167.6m, PBT increased by 11% to S$184.7m and net profit increased by 9% YoY to S$146.4m. Commercials sales formed 65% of total sales in 3Q12, up from the 62% for 3Q11.
Sector performance
Among the four main sectors, Land Systems registered the highest increase in revenue of 27% YoY to S$391m, due to higher project deliveries in Automotive and Munitions & Weaponry. Electronics' revenue rose 10% YoY to S$341m and PBT improved 11% to S$40.1m. Aerospace's revenue climbed 9% YoY to S$505m; PBT was up 3% to S$85.3m. Marine saw revenue decline 7% YoY to SS$236m which was mainly due to lower shipbuilding revenue related to lower revenue recognition from contracts. PBT dropped 3% YoY to S$30.4m. PBT margins for the four main sectors remained flat, at most +1/-1 ppt versus 3Q11's figures. The group maintained the PBT margin of 12% that it had in 3Q11 and 2Q12. STE expects to achieve higher revenue and PBT for FY12 over FY11.
TERREX, U.S. Marine Corps personnel carrier programme
Land Systems (ST Kinetics) has secured a contract through Science Applications International Corporation to supply a TERREX armoured personnel carrier for the demonstration phase of the U.S. Marine Corps Marine Personnel Carrier programme. The TERREX will be put through a 12-month period of performance trials. There are three others who have been selected for this phase. As of end Sep, STE's order book stood at S$12.5b, of which about S$1.4b is expected to be delivered in 4Q12. Although the order book represents a slight dip from S$12.7b as of end Jun, it is still at a very healthy level.
Maintain BUY
Rolling forward our model, we raise our fair value from S$3.81 to S$3.90 and maintain a BUY rating.
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