ST Engineering Limited ("STEngg") announced its Full Year FY2014 (Y/E Dec) results on 27 February before trading hours. We attended the Analyst Briefing that was held earlier this morning. These are the key takeaways from the briefing.

What is the news?

• S$6.54 billion revenue met consensus expectations.
• S$651 million PBT was below consensus expectations of S$675 million.
• 17.06 Cents EPS was below consensus expectations of 17.4 Cents EPS.

Analyst Briefing Key Takeaways

Conservative accounting treatment contributed to lower y-o-y profit – There were higher Allowances and Impairment losses in FY14 compared to FY13. Allowance for doubtful debts about S$5 million higher, Allowance for inventory obsolescence about S$70 million higher, and Impairment losses on intangibles S$11.6 million higher. All these add up to about S$90 million of non-cash charges, which if adjusted would have made FY14 PATMI comparable over FY13.

Dividend payout – No formal dividend policy, but Management will try to pay out at least 80%. (FY14 payout: 88%) Dividend payout is contingent on Company having sufficient retain earnings.

Investment Action

No stock rating or price target provided, as we do not have coverage on STEngg.

Source: Phillip Securities Research - 2 Mar 2015