ST Engineering

ST Engineering: Deutsche thinks that as MRO sector consolidates, STE (via ST Aerospace) will benefit as the strong players remain entrenched, while the weaker players contract or close down. For instance, following the closure of Aveos in Mar-12, ST Aeropace’s market share has increased from winning jobs once done by Aveos. To maintain lead, ST Aerospace has also expanded offerings in components, engines, aircraft interiors, and other related services which should allow the division to post a 3-year net income CAGR of 10%. Meanwhile ST Aerospace is a beneficiary of robust Asia Pac MRO spend which should grow to 4x that of the US by 2022. With a robust order book and healthy cash management, Deutsche recommends Buy with TP $4.70.