ST Electronics wins S$58m of deals

ST Electronics wins S$58m of deals. ST Engineering’s (STE) electronics arm – ST Electronics (STEL) – has secured contracts worth around S$58m for Intelligent Transport Systems (ITS) and Info-Security (IS) projects as orders continue to flow in. Earlier in Jun, its marine arm – ST Marine (STM) – announced that it won a shipbuilding contract worth S$171m from Swire Pacific Offshore Operations to build four offshore supply vessels.

ITS deals worth S$30m. According to STE, the various ITS projects will total S$30m, where STEL will implement an Automatic Fare Collection System for the extension of the Bangkok Mass Transit System Silom Line in Bangkok, which will be delivered by end 2012; STEL will also deliver a number of “eco-enabling traffic management improvement projects” on the roads in Asia. In addition, STEL will provide consultancy expertise for an Integrated Transport Platform (ITP) project in the western part of China which involves the design of an ITP for subsystems such as CCTV, licence plate recognition etc. Last but not least, STEL was also one of the four consortia awarded a tender by LTA (Land Transport Authority of Singapore) to conduct an 18-month system evaluation test for the next-generation electronic road pricing system.

IS deals worth S$28m. In the IS segment, STEL has won a number of contracts worth some S$28m to implement infosecurity devices and solutions for a national infrastructure project in Singapore; implement a security incident and event management system; and also set up a Cyber Security Operations Centre.

Expects no material impact in FY11. As with the earlier STM contract, the latest deals come with relatively long delivery dates, hence they are not expected to have any material impact on the group’s NTA and EPS for FY11. Nevertheless, we note that these orders would bump up its estimated order book to S$11.5b, of which management had previously guided that it would deliver some S$3.0b from Apr to Dec this year. The group had also said it believes to deliver higher revenue and profit-before-tax this year.

Maintain BUY with S$3.57 fair value. As before, we also do not expect the ongoing dispute with Louis Dreyfus Armateurs (LDA) over a vessel contract to have any significant impact on STE as a whole. STM believes that its total liability is capped at 10% of the deal worth S$178m – we also estimate any settlement would result in <5% reduction in the group’s FY11 pre-tax profit (Please see our 14 Jun report for more information). Hence we maintain our BUY rating on the stock with a fair value of S$3.57 (based on 21x FY11F EPS).

ST Electronics wins $58m contracts

ST Engineering’s electronics arm, ST Electronics, has secured contracts worth $58 million for intelligent transportation systems and info-security projects.

Intelligent transportation systems projects account for $30 million.

In Thailand, ST Electronics will implement an automatic fare collection system (AFCS) for the Silom Line extension of Bangkok’s mass transit system.

The fare system will be for stations from Wong Wian Yai to Bang Wa and is scheduled for completion by the end of next year.

In China, ST Electronics will provide consultancy expertise for an integrated transport platform for a major city in the western part of the mainland.

This consultancy will include the design of a platform for subsystems such as CCTV, licence plate recognition, automated incident detection, dynamic messaging and parking guidance, traffic signal controls and enforcement system, as well as control centre and expert systems.

With the integrated transport platform, residents will benefit from the safe, efficient and enhanced intelligent transport system infrastructure.

In Singapore, the company is one of four consortia awarded a tender by the Land Transport Authority to conduct an 18-month system evaluation test for the next generation of electronic road pricing system.

Elsewhere in Asia, ST Electronics will deliver over the next 12 months a number of eco-enabling traffic management improvement projects, including the implementation of a radar and central management system for the purpose of monitoring traffic.

Info-security projects, which account for $28 million of the contract value, include the implementation of info-security devices and solutions for a national infrastructure project as well as a security incident and event management system.

In addition, the company will set up a cyber security operations centre, which will strengthen ST Electronics’ capability in the area of cyber security.

ST Engineering shares closed four cents higher at $2.88 yesterday.