ST Engineering

ST Engineering: OCBC maintains Hold with $3.97 TP. Note that the share price of Singapore Technologies Engineering (STE) has fallen 12.1% since the peak of $4.56 on 24 Apr 2013. But note recent contract wins that attest to the group’s market leading positions. Just yesterday, ST Aerospace announced that it has signed a long-term agreement with UTC Aerospace Systems to provide maintenance, repair and overhaul (MRO) services on the Boeing 787 Dreamliner nacelle systems for the Rolls-Royce Trent 1000 and General Electric GEnx engines. Nevertheless, as the market seems to be taking a more “risk off” approach, house now using a lower 20x peg (versus 22x previously) against our FY13F EPS, which results in our fair value easing from to $3.97 from $4.36. Maintain a HOLD rating on STE, supported by an estimated FY13 dividend yield of 4.5%