STEng – BT
ST Engg arm wins RSAF contracts worth $363m
ST ENGINEERING yesterday announced that its aerospace arm, ST Aerospace, had been awarded two maintenance contracts for six years by the Republic of Singapore Air Force (RSAF) for a total of $363 million.
No details were provided, and company sources declined to elaborate, citing the sensitive nature of the military contracts. But in a statement, ST Engineering said work for both contracts will commence immediately.
ST Aerospace’s support of the RSAF covers a broad spectrum of its fleet of aircraft. The company, which accounts for 40 per cent of the group’s income, has a broad range of capabilities covering aircraft, engines and component maintenance, engineering development and materials support.
ST Engineering said these contracts would not have any material impact on the consolidated net tangible assets per share and earnings per share of the company for the year.
Last week, ST Engineering reported a FY2009 net profit of $444 million, with all divisions except its aerospace recording double-digit earnings growth.
The aerospace segment dipped 3 per cent in revenue to $1.87 billion year-on-year, because of lower turnover in its aircraft maintenance and modification and component/ engine repair and overhaul business groups.
But ST Aero has recently clinched a substantial global passenger-to-freighter (PTF) conversion project for 87 B757 aircraft for Federal Express, and this is expected to dovetail nicely to take up the slack as the MD11 PTF projects wind down.
Still analysts are mixed on ST Engineering. CIMB has an underperform call with a target price at $2.98 pending review, while Citibank has a buy with a target of $3.60 per share.
ST Aero is the world’s largest independent MRO player, with over a dozen facilities and offices in the US, Europe, Central America and Asia. Its sister companies under the ST Engineering group – ST Electronics, ST Kinetics (Land Systems) and ST Marine – are all successful global players in their own fields.
The aerospace unit, which has a facility at Seletar Aerospace Park, has also entered the executive jet charter business recently. Currently boasting a fleet comprising two Citation C90s, two Learjets and one Gulfstream, the company is eyeing the potential demand for business jet charters in the region, and Singapore in particular.