UOBKayhian on14 May 2015
FY15F PE (x): 22.0
FY16F PE (x): 22.1
Normalised earnings are below expectations. Reported net profit amounted to 23% of
consensus’ full-year estimate, which forecasted a 5% yoy growth. We reckon that
earnings were below expectations as net profit would have declined by around 16% if
we were to strip out incremental wage credits, the absence of air show-related expenses
and fair value changes. Orderbook stood at S$12.2b, S$0.3b lower than 4Q14.
Operating cash flow rose 160% due to favourable working capital changes. Maintain
HOLD. We reduce our target price to S$3.30 and continue to value STE at long term
mean multiple of 19.0x on 2015’s earnings. However, with an estimated S$3.2b of order
backlog and strong cash flows, we still think that the company is worth holding.
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