ST Engineering (STE) reported its FY14 revenue slipped 1.4% to S$6539.4m, or about 2.0% below our forecast, while profit before tax fell 10.8% to S$650.7m, which STE had earlier guided that it would be lower. Net profit retreated 8.4% to S$532.0m, or about 2.7% below our estimate. STE declared a final dividend of 4.0 S cents/share plus a special of 7.0 S cents/share, bringing the full-year dividend to 15.0 S cents, unchanged from FY13. Going forward, STE expects FY15 revenue and PBT to be comparable to FY14, backed by an order book of S$12.5b (as of end Dec). In view of the FY14 performance and comparable FY15 guidance, we need to pare our FY15 estimates for revenue by 2.4% and core earnings by 7.9%. While we are keeping our 19x peg versus FY15F EPS, our fair value eases from S$3.47 t0 S$3.33. However, as we still expect STE to pay at least S$0.15/share of total dividend in FY15, we maintain our HOLD rating.
Weaker FY14 results as guided
ST Engineering (STE) reported its FY14 results this morning, with revenue easing 1.4% to S$6539.4m, or about 2.0% below our forecast, while profit before tax slipped 10.8% to S$650.7m, which STE had earlier guided that it would be lower. Net profit fell 8.4% to S$532.0m, or about 2.7% below our estimate. STE declared a final dividend of 4.0 S cents/share plus a special of 7.0 S cents/share, bringing the full-year dividend to 15.0 S cents, unchanged from FY13.
Electronics, Others showed better profitability
All business segments showed revenue declines of between 1% and 18%, with the exception of Marine (+8%), which also outperformed its comparable guidance; this mainly due to higher Shipbuilding and Engineering revenues. Others and Electronics segments showed higher PBT of 126% and 8% respectively, while the rest saw declines of between 11% and 50%. Nevertheless, these were in line with its guidance.
Guides for comparable FY15 performance
Going forward, management is guiding for FY15 revenue and PBT to be comparable to FY14 (growth to be between 0% and 5%), barring unforeseen circumstances; this backed by an order book of S$12.5b (as of end 2014), where S$3.8b of which is expected to be delivered this year. By segments, it expects Aerospace revenue and PBT to be comparable; Electronics revenue and PBT to both be higher; Land Systems revenue to be comparable, PBT to be higher; and Marine revenue to be lower, PBT to be comparable.
Lowering FV to S$3.33 on softer FY15 estimates
In view of the FY14 performance and comparable FY15 guidance, we need to pare our FY15 estimates for revenue by 2.4% and core earnings by 7.9%. While we are keeping our 19x peg versus FY15F EPS, our fair value eases from S$3.47 to S$3.33. However, as we still expect STE to pay at least S$0.15/share of total dividend in FY15, we maintain our HOLD rating.
ST Engineering (STE) reported its FY14 results this morning, with revenue easing 1.4% to S$6539.4m, or about 2.0% below our forecast, while profit before tax slipped 10.8% to S$650.7m, which STE had earlier guided that it would be lower. Net profit fell 8.4% to S$532.0m, or about 2.7% below our estimate. STE declared a final dividend of 4.0 S cents/share plus a special of 7.0 S cents/share, bringing the full-year dividend to 15.0 S cents, unchanged from FY13.
Electronics, Others showed better profitability
All business segments showed revenue declines of between 1% and 18%, with the exception of Marine (+8%), which also outperformed its comparable guidance; this mainly due to higher Shipbuilding and Engineering revenues. Others and Electronics segments showed higher PBT of 126% and 8% respectively, while the rest saw declines of between 11% and 50%. Nevertheless, these were in line with its guidance.
Guides for comparable FY15 performance
Going forward, management is guiding for FY15 revenue and PBT to be comparable to FY14 (growth to be between 0% and 5%), barring unforeseen circumstances; this backed by an order book of S$12.5b (as of end 2014), where S$3.8b of which is expected to be delivered this year. By segments, it expects Aerospace revenue and PBT to be comparable; Electronics revenue and PBT to both be higher; Land Systems revenue to be comparable, PBT to be higher; and Marine revenue to be lower, PBT to be comparable.
Lowering FV to S$3.33 on softer FY15 estimates
In view of the FY14 performance and comparable FY15 guidance, we need to pare our FY15 estimates for revenue by 2.4% and core earnings by 7.9%. While we are keeping our 19x peg versus FY15F EPS, our fair value eases from S$3.47 to S$3.33. However, as we still expect STE to pay at least S$0.15/share of total dividend in FY15, we maintain our HOLD rating.
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