ST Engineering (STE) announced its 3Q19 earnings before market hours on 11 November. While its top-line was a strong 27% YoY growth, STE’s net profit only registered a dismal 3% YoY growth. This was due to a one-off provision for its Marine’s division arbitration outcome. Excluding that negative impact, earnings would have grown by 12% to S$150m.

The street is generally positive on STE, with CIMB previously forecasting that the company will be generating S$150m in profits this quarter, in-line excluding the negative impact from the arbitration provision.

On a FY2019 basis, the street is forecasting earnings in the region of S$580m to S$620m. This is likely not achievable on a reported earnings basis. On an adjusted earnings basis, this will imply approx. 7%-33% growth on a YoY basis.

We suspect there will be some minor downward earnings revision by the street.

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