Shares & Derivatives
ST Engineering: Analyst report
By I  •  September 8, 2011
Protect your portfolio! This should be the best time to buy STE for its defensive
quality in the face of volatile markets.
Indeed, its share price has outperformed the
market by 11% in the last three months. With little room for sharp depreciation in
the US$, we are hanging on to hopes of earnings surprises, which we believe can
offer re-rating catalysts. Consensus expects the US$/S$ to hover at S$1.18-1.20
into 2012, which would have a negligible (1% or S$6m) impact on STE’s PBT in
the worst case. In fact, we believe current valuations of 15x CY12 P/E (below its
average trading band of 16x during the previous crisis) have priced in fears of US$
deterioration and macro uncertainties. No change to our earnings estimates, target
price of S$3.61 (still based on blended P/E, DCF and dividend yields).
• Zero order-book risk. Unlike its conglomerate peers with ......
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By I
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