Singapore Technologies Engineering (STE) reported its 3Q15 results this morning, with revenue down 3% YoY at S$1500.0m, mainly dragged down by Marine (down 39% to S$205m), but mitigated somewhat by Electronics (+21% to S$429m). Still, PBT grew 2% to S$154.7m, in line with management’s “comparable” guidance. Reported net profit climbed 10% to S$133.3m; but we estimate that core earnings likely fell 3% to S$147.2m, after excluding forex and other one-off items.

9M15 revenue slipped 3% to S$4556.4m, meeting just 68% of our FY15 forecast, while PBT fell 4% to S$463.7m; net profit eased 1% to S$388.2m, or about 71% of our full-year forecast. Going forward, STE expects FY15 revenue to be comparable to FY14; but now guides for PBT to be lower versus its earlier comparable guidance. We will have more after the analyst briefing later. Meanwhile, we are placing our Buy rating under review as the stock has performed very well (+13%) since our upgrade on 6 Oct and is already very near our S$3.33 fair value (which is also under review).

Source: OCBC Research - 6 Nov 2015