ST Engineering

[mkmk]

http://infopub.sgx.com/FileOpen/Aero_arm...eID=259819

ST ENGINEERING’S AEROSPACE ARM SECURES NEW ORDERS WORTH $600M IN 3Q2013

Singapore Technologies Engineering Ltd (ST Engineering) today announced that its aerospace arm, Singapore Technologies Aerospace Ltd (ST Aerospace) has secured new orders worth about $600m in the third quarter of 2013. The new orders involve projects ranging from airframe, component and engine maintenance, to commercial airline cabin retrofit and freighter conversions.

Included in the 3Q2013 contracts is an order of 17 passenger-to-freighter (PTF) conversions received from an international air freight carrier, bringing to 119 the total number of aircraft contracted for the Boeing 757-200 PTF conversion programme.

In the cabin interior business, ST Aerospace’s expertise in providing complete turn-key solutions has once again been affirmed with the clinching of a cabin reconfiguration project for two Boeing 767-300 airplanes for an Asian airliner. Another noteworthy achievement is the ownership of a Supplemental Type Certificate (STC) awarded by the European Aviation Safety Agency for a full cabin retrofit programme involving six A330 aircraft for an international carrier.

In the third quarter, ST Aerospace redelivered a total of 245 aircraft for airframe maintenance and modification work. This is in addition to the five Boeing 757-200 converted freighters redelivered during the quarter. Besides airframe redeliveries, the aerospace sector processed 11,360 components, 59 landing gears, 57 engines and conducted 1,570 engine washes for both commercial and military customers.

ST Aerospace continues to strengthen its footprint by implementing market expansion strategies in the engine leasing and pilot training sectors. ST Aerospace’s wholly owned subsidiary, ST Aerospace Engines Pte Ltd (STA Engines) recently injected additional capital into its 50%- jointly controlled company Total Engines Asset Management Pte Ltd (TEAM). TEAM has placed out 10 engines to date. It has also expanded its leasing portfolio to include the International Aero Engines V2500 engine, on top of the CFM56 series engines.

On the development of the pilot training business, ST Aerospace’s commercial pilot training academy has been certified as a Type Rating Training Organisation by the Civil Aviation Authority of Singapore (CAAS). With this certification, ST Aerospace’s training academy will be able to provide aircraft type conversion training leading to CAAS type ratings, thus enriching its portfolio of training courses. A fixed-based Airbus A320 FFT X™ - MPL simulator has also recently been commissioned at ST Aerospace’s training academy at Seletar Aerospace Park in Singapore. This device - which features state-of-the-art technology and a fully type-specific cockpit - has been
specially designed to support the Multi-Crew Pilot Licence (MPL) Phase II training. ST Aerospace is the first in Singapore to develop the MPL programme.

The above developments are not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.

(Not vested)

[CityFarmer]

ST Engineering’s Q3 profit down 10% to S$131.4 million

SINGAPORE - Defence contractor and aircraft maintenance firm Singapore Technologies Engineering on Thursday reported a 10.3 per cent drop in third-quarter net profit due to an impairment charge, Dow Jones Newswires reported.

Net profit in the quarter ended Sept 30 was S$131.4 million, compared with S$146.4 million in the same period last year, the company said in an after-market statement. Revenue was little changed at S$1.55 billion - against S$1.54 billion last year, it added.

ST Engineering took an impairment charge of S$23.7 million in the quarter for a marine project, the statement showed.

The company had an order book of S$12.5 billion at the end of September, of which about S$1.5 billion is expected to be delivered in the last quarter of this year, it said.
http://www.todayonline.com/business/st-e...14-million

[ARC]

This seems rather disappointing even after adjusting for the one-offs. Revenue and profit guidance for FY have been revised from higher y-y to comparable y-y.

[Dividend Warrior]

Seems like ST Aerospace is doing a good job on the F16 program!

_____________________________________________________________________

Singapore says in 'no particular hurry' to buy Lockheed F-35 jets
WASHINGTON Thu Dec 12, 2013

(Reuters) - Singapore's Defense Minister Ng Eng Hen on Thursday said his country was seriously considering buying Lockheed Martin Corp's (LMT.N) F-35 fighter jet but was in "no particular hurry" to buy new jets since its F-16 fighters were still in good shape.

"Singapore is seriously looking at the F-35s to replace our F-16s," the Singapore official told reporters at the Pentagon during a joint news conference with U.S. Defense Secretary Chuck Hagel.

"We're in no particular hurry, because our F-16s are still very operational, and they're due for upgrades. But it is a serious consideration," The Minister said.

[ARC]

I am not vested in ST Eng and have no interest to do so. Would like to ask just for learning purposes.

Simply looking at some figures from Bloomberg, the stock is currently trading at approximately P/E 21 times and P/B 6.67 times. Can I simply conclude that this is certainly not a under valued company and that there is NO margin of safety at all? Even if one believes that the company can continue to have strong growth potential, don't the risks far exceed whatever the possible reward? Blue chips are not infallible and many of them have zero margin of safety at the present moment. If such figures are justifiable, wouldn't RMG, SGX, SIA ENG be worth buying too at their current "very high" prices?

I am not even interested to continue looking at other key figures as with P/E and P/B at ridiculously high numbers, it seems that it would be much wiser to sell than to buy.

What do you think?

In general...
On average, entering into a stock at high P/E, P/B multiples tend to offer lower margin of safety than entering into one with lower multiples. But the multiples must be taken into context. For instance, a high growth rate, high ROE or strong FCF could justify the high multiples. As such, to write any stock off on the basis of high multiples may be overly simplistic

On STE...
STE has typically enjoyed high multiples, despite a low/moderate growth profile, because it is deemed defensive. And it offers a yield that is attractive to certain investor segments which thus help support a high multiple.

Whether you should buy or sell is dependent on your view of STE's growth outlook, quality of earnings & cashflow, where valuations should be in that context & also in context of the greater market environment and whether the risk/reward makes sense.

Of course, if you can find better ideas, where you can be less smart and still make $, then you really have no need to bother yourself with STE, which is extremely hard to model and forecast given the many business lines it is engaged in.

----
www.i3-insitute.com
www.i3-institute.blogspot.com
www.facebook.com/i.invest.institute

[felixleong]

Warren buffett once paid 15 up to 18 times earnings for Coke and it was selling many times above book value too. It turned out of be one of his best investments.

High PE and high P/B may not automatically mean that a stock is overvalued. A serious value investor should take time to study a business deeply before coming to a conclusion of its fair value.

In my personal view, I think ST eng would be fairly valued at 20 times earnings and its 4% yield and 5-10% earnings growth is rather decent. However I do think there's little to no margin of safety at the current price levels.

ST engineering is definitely not an easy company to understand, if compared to another blue chip like Comfort Delgro. Since I struggle to understand all its business units, I avoid it.


Cheers ^_^

I am not vested in ST Eng and have no interest to do so. Would like to ask just for learning purposes.

Simply looking at some figures from Bloomberg, the stock is currently trading at approximately P/E 21 times and P/B 6.67 times. Can I simply conclude that this is certainly not a under valued company and that there is NO margin of safety at all? Even if one believes that the company can continue to have strong growth potential, don't the risks far exceed whatever the possible reward? Blue chips are not infallible and many of them have zero margin of safety at the present moment. If such figures are justifiable, wouldn't RMG, SGX, SIA ENG be worth buying too at their current "very high" prices?

I am not even interested to continue looking at other key figures as with P/E and P/B at ridiculously high numbers, it seems that it would be much wiser to sell than to buy.

What do you think?

[money]

Agree with Felix, at 20x earnings, many things must go right. Look at smrt, many people believed that because it is a blue chip, paying for it a price above $1.6 is okay

[LionFlyer]

A simple peer comparison yields the following:

General Dynamics (13.51)
Lockheed Martin (15.83)
Northrop Grumman (13.72)
BAE plc (14.32)

suggest a PE around 13 - 16 seems to be the norm for defense conglomerates, but EADS (29.71) are outlier although I am not sure why.

I am vested in ST Eng recently when the price corrected.

[Dividend Warrior]

Singapore, 6 January 2014 – Singapore Technologies Engineering Ltd (ST Engineering) announced today that its marine arm, Singapore Technologies Marine Ltd (ST Marine) has secured new orders worth about S$446m in the fourth quarter of 2013. These orders are in addition to the recent contract worth about US$350m won by our US shipyard, VT Halter Marine, Inc for the design and construction of two units of Container Roll-on/Roll-off vessels and the bareboat charter contract for the Roll-on/Roll-off Passenger vessel to Nova Star Cruises Limited.

The contracts are for logistics management, maintenance, major upgrade and conversion projects, which will be carried out in the Singapore yards. On shiprepair and upgrading, ST Marine has secured and delivered a series of contracts to support the offshore industries. These include repairs and upgrade of various types of offshore support vessels such as drillship and pipe-laying vessels.

Aside from the maintenance and shiprepair contracts, our environmental business unit based in Shanghai was awarded a contract to design a Pneumatic Waste Collection System for a mixed high-rise commercial and residential development in Zhongshan, Guangzhou, China.

[Dividend Warrior]

Singapore, 9 January 2014 – Singapore Technologies Engineering Ltd (ST Engineering) announced that its aerospace arm, Singapore Technologies Aerospace Ltd (ST Aerospace) has been awarded new orders worth $780m in the fourth quarter (4Q) of 2013. These contracts span the aerospace sector’s broad range of capabilities, from airframe, component and engine maintenance, to cabin reconfiguration and engine wash.

Following the launch of the 15-pallet cargo configuration development effort for its 757-200SF freighter conversion programme in June 2013, ST Aerospace received its first contract for five 757-200SF converted freighters with the new variant. A six-year contract was also secured with an existing Asian customer for the depot maintenance of its fleet of aircraft, covering airframes, components and engines.

ST Aerospace continued to gain momentum as a complete turnkey cabin reconfiguration provider, with the award of a cabin interior modification contract for 20 Boeing 767-300 aircraft. The first aircraft was inducted in early January 2014, targeted for redelivery by end of first quarter 2014. For VIP cabin reconfiguration, its US affiliate secured its first green aircraft completion contract from an undisclosed European-based VIP Boeing Business Jet customer.

In 4Q2013, ST Aerospace redelivered a total of 198 aircraft for airframe maintenance and modification work. A total of 10,985 components, 67 landing gears and 60 engines were processed, while 2,484 engine washes were conducted for both commercial and military customers.

On airframe capability development, a new narrow-body hangar was added at its Changi facility, capable of accommodating two single-aisle aircraft simultaneously.

In the US, ST Aerospace’s affiliate STA Mobile signed a Memorandum of Understanding with the City of Pensacola to jointly explore the development of a satellite airframe facility at the Pensacola International Airport.

For engine wash, ST Aerospace’s US affiliate EcoServices signed a teaming agreement with Vector-Hawk Aerospace for the launch of a new version of the EcoPower® engine cleansing system, specially developed for all international and domestic customers of commercial and military PT6 turboprop engine-powered aircraft.

On pilot training capability development, additional six Cessna 172 single-engine training aircraft with matching flight training device were acquired for its flying operations in Australia.

Other initiatives implemented in 4Q2013 include the setting up of an aircraft leasing business to focus on mid-life to end-of-life aircraft for leasing, conversion and part out; and the establishment of Hondo Aerospace at the South Texas Regional Airport in Hondo,Texas to venture into green harvesting of aircraft parts, components and engines.