ST Engrg

ST Engrg: has offered the top bid for struggling Florida aircraft modifier Pemco World Air Services at a bankruptcy auction, beating out rival bidders with an offer valued at US$49.7m, which includes at least US$6m in liabilities and US$41.9m in cash. PEM has ~ 900 workers who repair and inspect aging aircraft underneath nearly a million square feet of hangar space in Tampa, southern Alabama and outside Cincinnati. This will be STE’s third aircraft maintenance facility in the U.S. The expansion will mark the first time that the STE unit will have the capability of reconstructing the insides of 737-model jets; it already can modify 727s, 757s, 767s and some Airbus models. STE currently trades at FY12/13e P/E of 15.7x / 15.1x, and P/B of 4.7x / 4.2x, respectively, which is the mid-band of the historical range. Dividend yield remains attractive at 5.3%. Nomura reiterates Buy with TP $3.70, backed by orderbook of $13b.