ST Engrg

ST Engrg: Relatively in-line results. 2Q Rev at $1.5b -2.2% yoy -5.3% qoq and net profit at $130.5m +5.3% yoy +17.5% qoq. Rev from Aerospace division continued to be a major contributor to topline, approx 33.9% share of rev relatively flat yoy but up 12% qoq. Rev from Land Systems fell 14% yoy to $350.0m -2.2% qoq. Higher profit yoy and qoq was mainly due to Aerospace’s sector which had favourable sales mix and higher contribution from assoc but partially offset by weaker US dollar and higher allowances.

Co commented that 1H11 rev was negatively affected by 4.9% ($120m) and profit before tax -5.4% ($13m) due to a weaker US dollar. A rule of thumb would be a decline of $20m in rev and $3m to profit before tax per 1c depreciation in the USDSGD exchange rate.

Dividend declared at 3c per share, based on prev yr dividends, co has yield of 4.8%. Orderbook at $10.8b of which $2.3b is expected to be delivered in 2H2011. Deutsche maintains a Buy with TP$3.95.