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A positive note fr Deutsche Bank.
ST Engineering: Buy (Deutsche Bank, 10 June)
STE has seen strong order inflows from its military business and we expect this strength to continue. Sensitive in nature, military orders by the Singapore Armed Forces are often not disclosed but the difference between FY08 and 1Q09 order books (considering 1Q09 recognized total) suggests new orders worth about S$1.2bn were won in 1Q09, the bulk of which we think are liekly military related. STE manufactures products that are well regarded as indicated by the successful UK Bronco sales, continued orders for its 40mm ammunition, and the group previously being the front-runner for potential Indian howitzer order (now put on hold pending an investigation of a retired ordnance official by the Indian authorities). According to STE, its participation followed India's processes. Effective on or after 15 April 2009, for operators of aircraft converted by non-Boeing licensed converters, a fee of US$150-250k/year/plane will be charged by Boeing. ST Aerospace, being a Boeing licensed partner, will fall under a special category with lower fees paid by operators. This move is positive in our view as it effectively raises the price of work done by non-licensed players and may lead to future potential business flowing to licensed parties such as ST Aero. STE is sitting on a record order book of about S$11bn (as at 1Q09), providing healthy long-term visibility. The group is in a net cash position which places it strongly for any potential M&A activities. Our DDM-based target price of S$3.00 is based on a 7.4% cost of equity, (2.6% RFR and 4.8% ERP). Downside risks relate to project execution, greater-than-expected US$ depreciation, and worse-thanexpected aircraft grounding. Maintain Buy on what we see as attractive valuation.
This news below may provide ST extra muscle to edge its share value higher....
ST Engineering today announced that its electronics arm, ST Electronics, has been awarded a contract to provide the Advanced Combat Man System (ACMS) to the Singapore Armed Forces (SAF). The project which is worth over $100 million will start immediately and is expected to be completed by 2012.
The ACMS is a 3rd Generation Networked Warrior system fully equipped with advanced C4I (Command, Control, Communications, Computers and Intelligence) and network capabilities.
The ACMS is a joint development effort that started in 1998 among the Defence Science and Technology Agency, the Singapore Armed Forces (SAF) and ST Electronics with the support of Singapore Technologies Kinetics (ST Kinetics) in the area of weapon sub-system. It features innovations from ST Electronics and ST Kinetics. For this contract, ST Kinetics is a subcontractor to ST Electronics.
The development of the ACMS focuses on two key areas — to ensure seamless integration of individual soldier’s capabilities and to integrate the soldier as part of a network-centric force.
The system is aimed at improving the situational awareness, mobility, command and control, lethality and survivability of the soldier, resulting in a significant improvement in his fighting capabilities.
The introduction of the ACMS is a part of SAF’s 3rd Generation Transformation to progressively provide tactical units with network capabilities, which are vital for ensuring mission success. The ACMS allows section commanders and team leaders to become a part of a larger network that is able to tap into the wider resources of the battalion and call for more precise fire support. These sections function not only as fighting units but also as ground sensors, tracking the positions of various forces and feeding images and information back to the command headquarters for enhanced command and control of the battlefield.
Believe the Capital Group has been reducing its stake recently.....that's why it can't cheong. But Aberdeen had done the reverse...see who is stronger lor?
For medium - long term investors, this one is a buy at current price. Just my opinion.
wongmx6 ( Date: 31-May-2009 19:56) Posted:
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No doubt this is a good company, if you want to long it for few years, Reward is probable.
Look at the poor outlook of Aviation Industries. I guess patient is needed.
I myself also like this company, i wish to buy some to keep when the price and feeling is right.
Wish you good luck, Trust yourself and your judgement.
dealer0168 ( Date: 31-May-2009 11:25) Posted:
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