ST Engineering (STE) reported its 1Q14 results this morning, with revenue coming in at S$1551.8m, +0.5% YoY, and met 22% of our FY14 forecast; higher marine revenue was largely offset by lower revenue from the Electronics and Land Systems sectors, while Aerospace had comparable revenue. Nevertheless, profit before tax climbed 5.8% to S$167.9m, led by higher PBT from the Marine sector. NPAT increased 2.4% to S$137.2m, or about 22% of our full-year forecast. Going forward, STE expects to achieve comparable revenue and PBT in 1H14 as that of 1H13; also expects to achieve higher revenue and PBT for FY14 over FY13. Order book inched up from S$13.2b (as of end 2013) to S$13.4b as of end-1Q, and STE expects to deliver S$3.3b of orders in the rest of 2014. We will have more after the analyst briefing later. For now, we maintain our HOLD rating but place our S$3.84 fair value under review.

Source: OCBC Research - 9 May 2014