ST Engineering

ST Engineering (STE): At the ongoing dbAccess Asia 2014 conference, STE highlighted its order book of $13.4b has more than doubled since 2005, providing healthy visibility for the group. Management has maintained its guidance for higher revenues and PBT in FY14 vs. FY13, and indicated that 1H14 would be comparable yoy, which implies a stronger 2H14. On dividends, STE highlighted that its FY13 dividend payout at 80% is healthy and that the reduction from 90% previously was largely to reduce the impact from withholding taxes when funds are repatriated out of the US. In Aerospace, STE highlighted that MRO rates have been steady and they remain in a good position to benefit from continued outsourcing in the industry. ST Electronics sees opportunities for intelligent transportation solutions, increasing demand for Ka-band in satellite communications, cyber security solutions and data analytics. In Land Systems, the division will offer new and improved defence solutions, penetrate new markets and target upgrade opportunities for ageing platforms. In Marine, management highlighted healthy customer enquires in the offshore support segment and is hoping for potential vessel contracts in the subsea construction market. DB has a Buy with TP of $4.30.