ST Engineering

ST Engineering: Decent set of results which was largely in-line. Good performance at the Aerospace and Land System division helped to offset the flat y-y performance in Electronics & Marine. Lower other income was a drag, partially offset by a y/y increase in contribution from associate and lower taxes. Consequently, 2Q13 net profit was up 3.3% y/y at $147.9m. There were a number of one-off gains on disposal on property and investment this year and last year. Adjusting for these, profit before taxes would have increased by 6% y/y instead of 0.8% y/y and the adjusted net profit y-y growth would also have been higher by a similar differential. Going forward, management maintains their guidance for the full year and expect higher revenues and PBT to be achieved in FY13F, implying that PBT in 2H13 will be much stronger than 1H13. This is expected to be the case across all divisions, according to management. The group has an order book of $12.7b as at June 2013 and stretches its earnings visibility for at least 3 years, while its balance sheet remains robust with a net cash position of $0.7b. Latest brokers ratings as follows: Maybank-KE maintains Buy with $4.80 TP CS maintains U/p with $3.40 TP Deutsche maintains Buy with $4.70 TP Nomura maintains Neutral with $4.31 TP UOB Kay Hian maintains Hold with $8.05 TP