UOBKayhian on 10 Nov 2014
FY14F PE (x): 20.0
FY15F PE (x): 19.2
Aerospace division drags earnings. The sale of unprofitable landing repair and overhaul
shops in Oslo and Madrid led to a S$12m charge, otherwise 3Q14 pre-tax profit (PBT)
would have been flat yoy. Much of the top-line decline in the aerospace division arose
from the airframe maintenance division.
Cut target price by 10% to $3.63. Most of the pain associated with restructuring US
operations is likely to be felt in the coming two quarters. Until we see stronger growth,
STE is unlikely to trade above its long-term PE of 19.4x. Maintain HOLD. Suggested
entry price at $$3.20-3.30.
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