ST Eng

ST Eng: StanChart’s on the ground report says that STE has an LCC advantage. LCCs in Asia Pac have expanded their fleets over 3x the rate of other carriers over the past 10 years, making them a critical future demand segment for aircraft maintenance. STE’s strong capabilities in narrow-body aircraft suits the LCC fleet, and is price competitive. Competitiveness is also boosted by the fact that they’re not affiliated by other airlines. Recent initiatives, such as consolidating cabin interior modification business and establishing aircraft leasing JV should enhance overall business growth, while lower cost inflation compared to Asia-focused peers like SIA Engineering should also give it an edge. StanChart expects earnings growth to rebound to 7% in 2014, and reiterates O/PF and TP of $4.20