SINGAPORE (Feb 29): CIMB has raised ST Engineering’s “hold” rating to “add” following the defence contractor’s full-year results, citing improved valuations.

The research house has also lowered its target price to $3.17 from $3.33.

CIMB notes that headwinds on ST Engineering’s business segments, such as electronics and aerospace, aren’t as strong as they were. It argues that valuations are starting to look attractive again, and that “while peers are suffering from tight gearing and customer default risks, STE's net cash of $1.4 billion (including bonds) offers a safer refuge.”

ST Engineering’s valuation is one standard deviation lower than its seven-year mean, CIMB notes.

As at 12.25pm, ST Engineering is up 4.6% higher at $2.98, compared to a 0.58% rise in the benchmark Straits Times Index.