ST Engg posts $528m full-year net profit

Group has record orderbook of $12.3b, expects higher sales in 2012

ST Engineering – which rang in a record orderbook of $12.3 billion – said yesterday that it expected higher revenue and pre-tax profit this year, with about one- third of the order backlog, or $3.9 billion, set for delivery in 2012.

The details came as full- year net profit for the group edged higher by 7.4 per cent amid flat growth in sales.

Net profit for the 12 months ended Dec 31, 2011, stood at $528 million, up from 2010’s $491 million.

The results were below earnings estimates of $579 million, according to a Bloomberg poll of 15 analysts.

The full-year profit attributable to shareholders translated to earnings per share of 17.28 cents, up from 2010’s 16.21 cents.

Full-year revenue stood pat at $5.99 billion. Sales in the aerospace and electronics segments were stronger but the group saw poorer performance in the land systems and marine divisions.

But cost of sales went down by a slightly quicker rate, lifting gross profit by 3.3 per cent to $1.3 billion for the year.

A ‘benchmarking exercise’ of inventory obsolescence estimates brought its net allowance for inventory obsolescence to $181,000 compared with $27.6 million a year ago.

Net finance costs fell 55.3 per cent to $19.4 million, thanks to foreign exchange gains of $4.83 million. A year ago, the group posted a forex loss of $8.72 million. Interest expenses were also lower.

Revenue from its biggest sales contributor – the aerospace division – inched up 3 per cent to $1.92 billion, with higher revenue from its component/engine repairs and overhaul business as well as engineering and material services offset by lower sales in its aircraft maintenance and modification business. Its revenue contribution stood at 32 per cent of total sales.

Sales from its electronics department rose 7 per cent to $1.48 billion, boosted in part by recorded revenue from its work on the Circle Line and the Bangkok automatic fare collection system projects.

But revenue from its marine sector slid 16 per cent to $876 million, dragged down by lower shipbuilding revenue after a contract for a roll-on/roll-off passenger ferry – ships that have cargo with wheels driven on and off the ship – was terminated.

In profitability terms, only the land systems division recorded lower pre-tax profit for the full year, compared with the previous 12 months.

Pre-tax profit for the sector stood at $108 million, down 5 per cent from a year ago, due mainly to the impact of an ‘unfavourable product mix’ that was partly offset by lower foreign exchange losses and favourable fair value change of embedded derivatives.

Earnings before tax for the aerospace sector rose 6 per cent to $278 million, while pre-tax profit for the electronics sector rose 7 per cent to $137 million.

The group proposed a final dividend of 12.5 cents per share.

Shares of ST Engineering closed two cents higher at $3.08 yesterday.

ST Engg posts $528m full-year net profit

Group has record orderbook of $12.3b, expects higher sales in 2012

ST Engineering – which rang in a record orderbook of $12.3 billion – said yesterday that it expected higher revenue and pre-tax profit this year, with about one- third of the order backlog, or $3.9 billion, set for delivery in 2012.

The details came as full- year net profit for the group edged higher by 7.4 per cent amid flat growth in sales.

Net profit for the 12 months ended Dec 31, 2011, stood at $528 million, up from 2010’s $491 million.

The results were below earnings estimates of $579 million, according to a Bloomberg poll of 15 analysts.

The full-year profit attributable to shareholders translated to earnings per share of 17.28 cents, up from 2010’s 16.21 cents.

Full-year revenue stood pat at $5.99 billion. Sales in the aerospace and electronics segments were stronger but the group saw poorer performance in the land systems and marine divisions.

But cost of sales went down by a slightly quicker rate, lifting gross profit by 3.3 per cent to $1.3 billion for the year.

A ‘benchmarking exercise’ of inventory obsolescence estimates brought its net allowance for inventory obsolescence to $181,000 compared with $27.6 million a year ago.

Net finance costs fell 55.3 per cent to $19.4 million, thanks to foreign exchange gains of $4.83 million. A year ago, the group posted a forex loss of $8.72 million. Interest expenses were also lower.

Revenue from its biggest sales contributor – the aerospace division – inched up 3 per cent to $1.92 billion, with higher revenue from its component/engine repairs and overhaul business as well as engineering and material services offset by lower sales in its aircraft maintenance and modification business. Its revenue contribution stood at 32 per cent of total sales.

Sales from its electronics department rose 7 per cent to $1.48 billion, boosted in part by recorded revenue from its work on the Circle Line and the Bangkok automatic fare collection system projects.

But revenue from its marine sector slid 16 per cent to $876 million, dragged down by lower shipbuilding revenue after a contract for a roll-on/roll-off passenger ferry – ships that have cargo with wheels driven on and off the ship – was terminated.

In profitability terms, only the land systems division recorded lower pre-tax profit for the full year, compared with the previous 12 months.

Pre-tax profit for the sector stood at $108 million, down 5 per cent from a year ago, due mainly to the impact of an ‘unfavourable product mix’ that was partly offset by lower foreign exchange losses and favourable fair value change of embedded derivatives.

Earnings before tax for the aerospace sector rose 6 per cent to $278 million, while pre-tax profit for the electronics sector rose 7 per cent to $137 million.

The group proposed a final dividend of 12.5 cents per share.

Shares of ST Engineering closed two cents higher at $3.08 yesterday.

ST Engg offer to Nera good for all: DMG analysts

THE offer by Singapore Technologies Engineering (ST Engg) to take Nera Telecommunications private is – according to DMG & Partners Research – a positive move for both companies and their shareholders.

In a report released yesterday, Edison Chen and Terence Wong of DMG said that ‘the valuation is fair and (Nera) shareholders should accept the offer’.

Calling it a win-win outcome, the analysts said: ‘The acquisition allows (ST Engg’s electronics arm) to leverage Nera’s in-depth expertise in system integration in the fields of both telecommunications and info-communications, to enhance its existing business in terrestrial and wireless broadband networks.’

‘On the other hand, shareholders of Nera can also monetise their investments with an offer price that is equivalent to 12.1x FY2011 price-to-earnings (8.6 ex-cash), and is around our intrinsic value estimates of 47 cents per share.’

Late last Friday night, ST Engg announced the move to acquire Nera by way of a scheme of arrangement. If successful, the move will see the generally thinly-traded Nera delisted from the Singapore Exchange (SGX) mainboard.

Nera shareholders stand to receive an aggregate cash amount of 45 cents per share, comprising 6 cents to be paid by Nera as a cash dividend, and 39 cents to be paid by ST Engg. The acquisition consideration, excluding the dividend, is $141.1 million.

Said the analysts: ‘Since we put up a ‘buy’ recommendation for Nera back in October 2011, the share price has surged 43 per cent, surpassing our target price of 47 cents. The offer price may be lower than the last traded, but this is largely due to investors playing up the shares of what was once a quiet stock.’

ST Engg said separately yesterday that its marine arm has won two shipbuilding contracts worth about $75 million from a wholly owned subsidiary of Swire Pacific. It also announced that wholly-owned ST Electronics (Info-Comm Systems) has acquired a further 2.77 per cent stake in Telematics Wireless for US$1.1 million.

Nera’s share price fell 11 per cent to close trading at 44.5 cents yesterday. ST Engg closed 0.33 per cent higher at $3.

ST Engg offer to Nera good for all: DMG analysts

THE offer by Singapore Technologies Engineering (ST Engg) to take Nera Telecommunications private is – according to DMG & Partners Research – a positive move for both companies and their shareholders.

In a report released yesterday, Edison Chen and Terence Wong of DMG said that ‘the valuation is fair and (Nera) shareholders should accept the offer’.

Calling it a win-win outcome, the analysts said: ‘The acquisition allows (ST Engg’s electronics arm) to leverage Nera’s in-depth expertise in system integration in the fields of both telecommunications and info-communications, to enhance its existing business in terrestrial and wireless broadband networks.’

‘On the other hand, shareholders of Nera can also monetise their investments with an offer price that is equivalent to 12.1x FY2011 price-to-earnings (8.6 ex-cash), and is around our intrinsic value estimates of 47 cents per share.’

Late last Friday night, ST Engg announced the move to acquire Nera by way of a scheme of arrangement. If successful, the move will see the generally thinly-traded Nera delisted from the Singapore Exchange (SGX) mainboard.

Nera shareholders stand to receive an aggregate cash amount of 45 cents per share, comprising 6 cents to be paid by Nera as a cash dividend, and 39 cents to be paid by ST Engg. The acquisition consideration, excluding the dividend, is $141.1 million.

Said the analysts: ‘Since we put up a ‘buy’ recommendation for Nera back in October 2011, the share price has surged 43 per cent, surpassing our target price of 47 cents. The offer price may be lower than the last traded, but this is largely due to investors playing up the shares of what was once a quiet stock.’

ST Engg said separately yesterday that its marine arm has won two shipbuilding contracts worth about $75 million from a wholly owned subsidiary of Swire Pacific. It also announced that wholly-owned ST Electronics (Info-Comm Systems) has acquired a further 2.77 per cent stake in Telematics Wireless for US$1.1 million.

Nera’s share price fell 11 per cent to close trading at 44.5 cents yesterday. ST Engg closed 0.33 per cent higher at $3.