• Maintain BUY with a new SGD3.97 Target Price from SGD4.04, 15% upside, amidst a 5% cut in 2018 profit.
• ST Engineering’s 1H18 profit of SGD235m (+14% y-o-y) was a tad below expectations amidst lower-than-estimated profit for Land Systems. Aerospace and Electronics, which remain key earnings drivers, delivered strong profit growth in 2Q18.
• We maintain that P2F conversions, increase in MRO capacity, smart city-related contracts in and outside Singapore, and higher defence exports should drive near-term profit growth.
• Strong orderbook with 2-year revenue visibility and +4% yield support our positive view on this stock. ST Engineering is one of our Singapore 2H18 Top Picks.

Source: RHB Invest Research - 10 Aug 2018