Singapore Technologies Engineering (STE) reported 1Q13 results that were generally in line with ours and consensus expectations. Revenue grew 0.2% YoY to S$1.54b, and PATMI fell 0.3% YoY to S$134m. Highlights include: 1) lack of the biennial Singapore Airshow in 1Q13, which contributed to a S$6.1m drop in share of results of associates and jointly controlled entities, 2) growth in administrative expenses by S$7.9m (7% YoY) due to increased headcount from new Aerospace subsidiaries. STE's order book reached a new high of S$13.0b as of end-Mar 2013 (4Q12: S$12.1b), of which S$3.6b is expected to be delivered in the remainder of 2013. We forecast FY13F EPS of 19.8 S cents. Raising our P/E peg to 22x from 20.7x, given the increased visibility from the record order book, we raise our fair value to S$4.36 from S$4.12. We maintain a HOLD rating on STE and estimate a FY13F dividend yield of 4.1%.
1Q13 results in line
STE reported 1Q13 results that were generally in line with ours and consensus expectations. Revenue grew 0.2% YoY to S$1.54b, and PATMI fell 0.3% YoY to S$134m. PBT margin for the group stayed flat YoY at 10.5%. Highlights include: 1) lack of the biennial Singapore Airshow in 1Q13, which contributed to a S$6.1m drop in share of results of associates and jointly controlled entities, 2) growth in administrative expenses by S$7.9m (7% YoY) due to increased headcount from new Aerospace subsidiaries. STE's order book reached a new high of S$13.0b as of end-Mar 2013 (4Q12: S$12.1b), of which S$3.6b is expected to be delivered in the remainder of 2013.
Aerospace PBT grew 26% YoY
Higher revenue in Aerospace (+4% YoY), Land Systems (+9% YoY) and Marine (+4% YoY) was offset by lower revenue in Electronics (-6% YoY). The lower revenue for Electronics was attributable to lower value project milestones in its communication and sensor systems group.
Aerospace registered a 1Q13 PBT margin of 16%, up from the 13% in 1Q12. This was due to a favorable sales mix, higher other income (one-off government grant), favorable FX and higher contribution from associates.
Better outlook for 2H13
STE continues to anticipate achieving higher revenue and PBT in FY13 versus FY12. For 1H13, STE expects higher revenue and comparable PBT YoY. In summary, these suggest that 2H13 is anticipated to be strong for the group. For Aerospace and Electronics, 1H13 revenue is expected to be comparable YoY while PBT is expected to be higher. For Land Systems, 1H13 revenue is expected to be comparable while PBT is expected to be lower YoY. For Marine, 1H13 revenue and PBT are expected be higher YoY.
Maintain HOLD
We forecast FY13F EPS of 19.8 S cents. Raising our P/E peg to 22x from 20.7x, given the increased visibility from the record order book, we raise our fair value to S$4.36 from S$4.12. We maintain a HOLD rating on STE and estimate a FY13F dividend yield of 4.1%.
STE reported 1Q13 results that were generally in line with ours and consensus expectations. Revenue grew 0.2% YoY to S$1.54b, and PATMI fell 0.3% YoY to S$134m. PBT margin for the group stayed flat YoY at 10.5%. Highlights include: 1) lack of the biennial Singapore Airshow in 1Q13, which contributed to a S$6.1m drop in share of results of associates and jointly controlled entities, 2) growth in administrative expenses by S$7.9m (7% YoY) due to increased headcount from new Aerospace subsidiaries. STE's order book reached a new high of S$13.0b as of end-Mar 2013 (4Q12: S$12.1b), of which S$3.6b is expected to be delivered in the remainder of 2013.
Aerospace PBT grew 26% YoY
Higher revenue in Aerospace (+4% YoY), Land Systems (+9% YoY) and Marine (+4% YoY) was offset by lower revenue in Electronics (-6% YoY). The lower revenue for Electronics was attributable to lower value project milestones in its communication and sensor systems group.
Aerospace registered a 1Q13 PBT margin of 16%, up from the 13% in 1Q12. This was due to a favorable sales mix, higher other income (one-off government grant), favorable FX and higher contribution from associates.
Better outlook for 2H13
STE continues to anticipate achieving higher revenue and PBT in FY13 versus FY12. For 1H13, STE expects higher revenue and comparable PBT YoY. In summary, these suggest that 2H13 is anticipated to be strong for the group. For Aerospace and Electronics, 1H13 revenue is expected to be comparable YoY while PBT is expected to be higher. For Land Systems, 1H13 revenue is expected to be comparable while PBT is expected to be lower YoY. For Marine, 1H13 revenue and PBT are expected be higher YoY.
Maintain HOLD
We forecast FY13F EPS of 19.8 S cents. Raising our P/E peg to 22x from 20.7x, given the increased visibility from the record order book, we raise our fair value to S$4.36 from S$4.12. We maintain a HOLD rating on STE and estimate a FY13F dividend yield of 4.1%.
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