ST Engineering

ST Engineering: With QE tapering likely to start in early 2014, CS least preferred stock is ST Engineering (UNDERPERFORM with $3.40 TP) on its limited scope for yield compression. STE's yield spread vs the Singapore government bond is 2.1%, one std dev below the historical average. In addition, house note that while bond yields in Singapore have risen from a low of 1.3% to 2.3%, they are still 80 bps shy of normalised levels of 3.1%.