ST Engineering (STE) reported its 1Q15 results this morning, where revenue slipped 2.6% YoY to S$1511.4m, mostly affected by difficulties faced by its US shipbuilding operations. Reported net profit slipped 5.3% to S$130.0m; we estimated that core earnings fell by a smaller 2.2% to S$142.9m. We deem these results to be broadly in line with the company’s guidance as well as our forecast, given that topline met about 23% of our FY15 forecast, while core earnings met 26%. Going forward, STE continues to expect 1H15 revenue to be comparable, while PBT is expected to decline against 1H14; Marine is expected to show lower revenue and PBT; Aerospace and Electronics to see comparable performance; Land Systems to see higher revenue but lower PBT. For the full-year, STE has maintained its comparable guidance for both revenue and PBT. As 1Q results were within expectation, we opt to leave our estimates unchanged. Maintain HOLD with S$3.33 fair value (still based on 19x FY15F EPS).
1Q15 results mostly in line with forecast
ST Engineering (STE) reported its 1Q15 results this morning, where revenue slipped 2.6% YoY to S$1511.4m, mostly affected by difficulties faced by its US shipbuilding operations. Reported net profit slipped 5.3% to S$130.0m; we estimated that core earnings (excluding forex and other one-off items) fell by a smaller 2.2% to S$142.9m. We deem these results to be broadly in line with the company’s guidance as well as our forecast, given that topline met about 23% of our FY15 forecast, while core earnings met 26%.
Marine segment fared badly
By segments, most showed YoY revenue declines, with the exception of Land Systems, which grew 6% to S$346m; this was achieved on higher revenue from the Automotive business group on the back of more project deliveries. Marine was the worst hit, slipping 13% to S$280m, mainly due to lower shipbuilding revenue from both local and US operations; but partially offset by higher shiprepair revenue. On the profitability front, only Electronics showed YoY PBT growth of 8% to S$34.9m; Marine saw a 26% tumble to S$23.4m.
Keeping guidance unchanged for now
Going forward, STE continues to expect 1H15 revenue to be comparable, while PBT is expected to decline against 1H14; Marine is expected to show lower revenue and PBT; Aerospace and Electronics to see comparable performance; Land Systems to see higher revenue but lower PBT. And for the full-year, STE has maintained its comparable guidance for both revenue and PBT. STE adds that it currently has an order book of around S$12.2b, of which it will be looking to deliver some S$3.0b in 2015.
Maintain HOLD with unchanged S$3.33 fair value
As numbers were mostly in line with our expectations, we opt to keep our forecasts for now. Maintain HOLD with an unchanged fair value of S$3.33 (still based on 19x FY15F EPS), supported by an expected dividend yield of 4.1%.
ST Engineering (STE) reported its 1Q15 results this morning, where revenue slipped 2.6% YoY to S$1511.4m, mostly affected by difficulties faced by its US shipbuilding operations. Reported net profit slipped 5.3% to S$130.0m; we estimated that core earnings (excluding forex and other one-off items) fell by a smaller 2.2% to S$142.9m. We deem these results to be broadly in line with the company’s guidance as well as our forecast, given that topline met about 23% of our FY15 forecast, while core earnings met 26%.
Marine segment fared badly
By segments, most showed YoY revenue declines, with the exception of Land Systems, which grew 6% to S$346m; this was achieved on higher revenue from the Automotive business group on the back of more project deliveries. Marine was the worst hit, slipping 13% to S$280m, mainly due to lower shipbuilding revenue from both local and US operations; but partially offset by higher shiprepair revenue. On the profitability front, only Electronics showed YoY PBT growth of 8% to S$34.9m; Marine saw a 26% tumble to S$23.4m.
Keeping guidance unchanged for now
Going forward, STE continues to expect 1H15 revenue to be comparable, while PBT is expected to decline against 1H14; Marine is expected to show lower revenue and PBT; Aerospace and Electronics to see comparable performance; Land Systems to see higher revenue but lower PBT. And for the full-year, STE has maintained its comparable guidance for both revenue and PBT. STE adds that it currently has an order book of around S$12.2b, of which it will be looking to deliver some S$3.0b in 2015.
Maintain HOLD with unchanged S$3.33 fair value
As numbers were mostly in line with our expectations, we opt to keep our forecasts for now. Maintain HOLD with an unchanged fair value of S$3.33 (still based on 19x FY15F EPS), supported by an expected dividend yield of 4.1%.
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