ST Engineering

ST Engineering (STE): According to a recent CIMB report on 28 Aug, house see a buying opportunity from the recent pullback of STE’s share price. Business fundamentals remain strong but CIMB see STE benefiting from the strengthening of the US$ with positive translation of earnings. According to CIMB, STE's share price has retreated about 11% over the past two weeks and has been sold down in line with the capitulation of the FSSTI, while US$/S$ has strengthened by about 2% since Jul 2013. STE derives about 30% of its revenue from the US (mostly from Aerospace and Marine). CIMB expect STE to benefit from US$ strength in FY13. With steady earnings growth of 7-10% and strong balance sheet (net cash of $740m), STE delivered the fastest bounceback in share price in any sell-down. The orderbook of $12.8b should also provide some certainty in earnings visibility. Dividend yield has also become more attractive at 4.8%.