ST Eng: 3Q results slightly lower than expected. 3Q Rev at $1.4b was lower 6.2% yoy -6.0% qoq due to poorer performance in Aerospace and Land Systems segments. Net profit at $133.8m +2.7% yoy +2.5% qoq but was boosted by a $19m writeback in allowances for inventory obsolescence. Mgmt has guided that earnings is expected to be flat yoy for FY11 compared to previous 2Q guidance of higher profit. Net orderbook was $11b which translates to approx 3 yrs backlog.
Citi downgrades from Buy to Neutral with TP$2.78 Believes group will be challenged to grow dividend and see ST Eng as a less attractive yield play.
Nomura issues a note expecting to revisit forecasts but maintains Buy with TP at $2.85 for now despite weaker-than-expected results. Positives include 5.3% for FY12F.
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