SINGAPORE (Nov 10): OCBC Investment Research is maintaining its “hold” call on Singapore Technologies Engineering with a fair value estimate of $3.41 following the group’s latest announcement of its 3Q17 financial results.
See: ST Engineering's 3Q earnings up 67% to $128.4 mil on absence of one-off charge
In a Thursday report, lead analyst Eugene Chua identifies persistent industry headwinds in the marine sector, due to the volatile and uncertain outlook of oil prices, as a continued drag on ST Engineering’s near-term prospects.
He nevertheless expects the group’s earnings to be sustained by its strong order book of $13.3 billion as at end-Sept, while FY17 revenue and profits before tax (PBT) are expected to remain comparable to that of FY16.
Over the longer-term, Chua is positive on the group’s electronics sector exposure to high-growth areas relating to Singapore’s smart nation initiatives, cyber security, and its smart city business that is gaining traction overseas.
“Another long-term growth driver could possibly be derived out of its recent acquisition of 100% interest in Aethon, known for its TUG Autonomous Mobile Robot (AMR) capable of lifting up to 635kg of load,” he adds.
See: ST Engineering acquires US robotics company Aethon valued at $50 mil
As at 11.14am, shares in ST Engineering are trading 1 cent higher at $3.38, or 22 times FY18 earnings.
