UOBKayhian on 5 Feb 2014
FY14F PE (x): 20.0
FY15F PE (x): 18.9
High opex resulted in 2.3ppt decline in operating margin. High costs of staff (+1.5% yoy),
subcontract work (+6.9% yoy) and materials (+8.6% yoy) led to operating margin
declining 2.3ppt for the quarter. The increase in material costs signified the inability to
pass on costs as revenue rose 2% yoy. We lower our FY14 and FY15 net profit
forecasts by 4% and 5%, and dividend estimates by 1 cent each to 21.5 cents and 23.0
cents respectively. We continue to value SIAEC on a DDM basis (COE: 6.9%, terminal
growth: 1%). At our target price of S$4.54, the stock offers a trailing FY14F dividend
yield of 4.7%.
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