ST Engg

ST Engg: FY11 results slightly below Bloomberg consensus, but ahead of UBS, JPM, DB estimates.
Revenue was flat yoy at $5.9b, impacted by a weaker USD, as well as reversal of revenue already recognised on the cancelled ropax shipbuilding contract.
Net profit increase 7.4% yoy to $528m, with higher electronics and aerospace earnings offsetting declines in land systems and marine.

The co ended 4Q11 with a record high $12.3bn order book, due to strong contract wins in the quarter.
STE expects S$3.9b of the book to be delivered in the next 4 quarters –high compared with previous years . Mgt guided that the group expects to achieve Y/Y higher revenue and pretax profit in FY12, led mainly by Aerospace and Electronic. UBS interprets STE’s guidance as a growth target of ~10%.

The co declared final div of 4cts and special div of 8.5cts. Total div for the year amounts to 15.5cts, and translates to a payout ratio of 90%, and yield of 5%.
Valuations largely undemanding, at 16.6x fwd P/E (close to -1 std dev of 15.9x), and 5.1x fwd P/B inline with long term historical average. ROE is high, at 30%.

UBS keeps at Buy, raises TP to $3.40 from $3.21.
JPM keeps at Neutral, raises TP to $2.80 from $2.60.
Deutsche keeps at Buy with TP $3.35.
Nomura keeps at Buy with TP $3.90