ST Engineering (STE) posted an 8% YoY rise in revenue and an 18% increase in net profit to S$138.2m in 1H19, such that the latter accounted for 46% and 45% of ours and the street’s full year estimate. Newly acquired MRAS was consolidated from 18 Apr as part of the Aerospace business group.

The order book as at end of Jun 2019 included the backlog of MRAS post acquisition and excluded the US$350m (S$472m) Jet Airways contract secured in 2015 as it is in the process of liquidation. STE expects to deliver S$3.8b of the order book in the remaining months of 2019.

In line with its usual practice, the group has declared an interim dividend of S$0.05/share. Pending an analyst briefing, we put both our Buy rating and fair value estimate under review.

Source: OCBC Research - 14 Aug 2019