Singapore Company Guide ST Engineering Version 5 | Bloomberg: STE SP | Reuters: STEG.SI Refer to important disclosures at the end of this report DBS Group Research . Equity 10 Nov 2016 BUY Earnings should rebound in FY17 Last Traded Price ( 10 Nov 2016): S$3.11 (STI : 2,834.09) Price Target 12-mth: S$3.50 (13% upside) (Prev S$3.55) Maintain BUY; good entry point. ST Engineering (STE) remains a relatively defensive stock with a healthy balance sheet and Potential Catalyst: Smart city-related contract wins, M&A secure dividend payouts, and the recent share price retreat Where we differ: Slightly more conservative on earnings than consensus creates a better entry point for the stock now. Its Aerospace segment has positioned itself well by investing in growth Analyst markets such as narrow-body aircraft Passenger-to-Freighter Suvro SARKAR +65 6682 3720
[email protected] (PTF) conversions, the Chinese MRO market, and cabin interior Singapore Research Team
[email protected] solutions, to name a few. The Electronics segment should also benefit from the ‘Smart City’ trend, not only in Singapore but What’s New various overseas markets as well. 3Q16 core earnings in line with expectations 3Q16 earnings in line, excluding one-off writedowns. STE reported headline net profit of S$76.7m, but excluding S$61.1m Exit from Chinese specialty vehicle business in one-off writedowns and closure costs related to its Chinese removes a significant drag on earnings specialty vehicles subsidiary that has ceased operations, 3Q16 core net profit of S$137.8m (up 3% y-o-y, 8% q-o-q) was FY16 dividends likely to be maintained at 15 Scts within expectations.