St Engineering (STE) reported its 2Q14 results this morning, with revenue coming in at S$1586.4m, down 0.7% YoY, after Land Systems saw lower sales due to fewer deliveries in the Automotive segment; Aerospace, Electronics and Marine registered growth of 6-12% YoY. But as all sectors except for Electronics recorded lower PBT, net profit fell 10% to S$133.2m. 1H revenue eased 0.1% to S$3138.2m, meeting 44.7% of our full-year estimate, while net profit of S$270.4m (down 4.1%) met 43.1% of our FY14 forecast.

STE declared a higher interim dividend of S$0.04/share, versus S$0.03 a year ago. Going forward, management expects to achieve higher revenue and PBT in 2H14. While STE expects FY14 revenue and PBT to be comparable to that of FY13, it was down from its earlier guidance of higher revenue and PBT for this year. We will have more after the analyst briefing. As we are likely to be making changes to our forecast, we keep our HOLD rating but place our S$3.84 fair value under review.

Source: OCBC Research - 13 Aug 2014