ST Engineering's Net Profit Grew 7% in FY2011

Good set of results by ST Engineering.

4Q2011 net profit grew 14% compared to 3Q2011

Singapore, 23 February 2012 - Singapore Technologies Engineering Ltd (ST Engineering) today reported revenue for financial year ended 2011 (FY2011) of $5.99b, compared with $5.98b a year ago.  Profit before tax (PBT) registered a 4% growth to $655.2m, while net profit grew steadily by 7% to $527.5m.

In the fourth quarter, Group's revenue of $1.54b was higher than that achieved in 3Q2011 by 11% or $150m. Except for Marine sector, all sectors recorded higher revenue compared to 3Q2011.  Marine sector's revenue of $91m was 64% or $164m lower, largely due to the reversal of Shipbuilding revenue in 4Q2011 following the Ropax contract termination.  Group's PBT of $184.3m for 4Q2011 was 11% or $18.4m higher than that achieved in 3Q2011. Land Systems and Marine sectors reported higher PBT, while Aerospace and Electronics sectors recorded lower PBT.

Compared to 4Q2010, 4Q2011 revenue and PBT were comparable while net profit was higher by 6%.

Higher EPS and Higher Dividend
Earnings per share (EPS) grew by 7% to 17.28 cents and economic value added increased by 10% to $405m.  Return on equity remained high at 29.9%.  Cash and cash equivalents and short term investments totalled $1.77b and advance payments from customers stood at $1.27b.

The ST Engineering Board of Directors is proposing a final dividend of 12.50 cents per share, consisting of an Ordinary Dividend of 4 cents per share and a Special Dividend of 8.50 cents per share.  Total dividend amounts to 15.50 cents per share, including the Interim Dividend of 3 cents per share paid out in September 2011.  This translates to a dividend yield of 5.07%, computed using the average closing share price of the last trading day of 2011 and 2010.

"The Group registered steady performance in FY2011 over FY2010.  While Revenue was flat at $6b, PBT increased by 4% and Net Profit grew by 7% to $527.5m.  The performance reflects the Group's resilience and its ability to navigate the highly uncertain and volatile economic environment.  The Group succeeded in securing more contracts and ended the year with a record high order book of $12.3b.

Barring unforeseen circumstances, the Group expects to achieve higher Revenue and PBT in FY2012 compared to FY2011." ~ TAN Pheng Hock, President & CEO, ST Engineering

Full Year Business Highlights 
For the full year, commercial sales accounted for 59% or $3.5b of revenue.  The Group grew its order backlog to a record high of $12.3b, an increase of 7% over FY2010 order backlog of $11.5b.  $3.9b of the $12.3b order backlog is expected to be delivered in 2012.

With revenue of $1.9b, the Aerospace sector accounted for 32% of Group's revenue.  The Electronics sector contributed 25% to the Group based on its revenue of $1.48b, which grew 7% year-on-year.  Land Systems sector contributed $1.48b or 25% of Group's revenue, while the Marine sector's revenue of $876m accounted for 14%.

All business sectors achieved significant milestones over the last year.

• Aerospace sector was ranked the world's largest maintenance, repair and overhaul provider for the 5th consecutive time by leading trade publication, Overhaul & Maintenance.
• Electronics sector entered the high-tech satellite industry offering comprehensive suite of satellite earth observation solutions and services. Its US subsidiary, iDirect Government Technologies, received the US government's approved Proxy Agreement to pursue classified Government and military contracts.
• Land Systems sector, through LeeBoy India, stamped its mark on the Indian road construction sector with the launch of its 785i Motor Grader that was engineered and manufactured in India to international standards based on its access to technologies of its US subsidiary, VT LeeBoy.
• Marine sector gained a stronger foothold in the Offshore Support Vessels market securing contracts for 12 vessels.

In 4Q2011, the Group announced new contracts worth over $1.26b for its Aerospace, Electronics and Marine sectors.  This included the shipbuilding contract to build eight Offshore Supply Vessels for Hornbeck Offshore Services; several naval contracts, and commercial shiprepair and conversion contracts; as well as a LRT communications contract in Taiwan.  It also included the five-year contract that ST Synthesis, its facilities management arm secured to provide facilities maintenance services to the Singapore Ministry of Defence.  In addition, its US subsidiary, VT Miltope announced that it has the potential to earn up to US$250m (about S$323.7m)* over five years on its teaming with General Dynamics C4 Systems on the Common Hardware Systems-4 programme.

Source: ST Engineering  

Dividends in Feb - May 2012

Keeping track of the dividends to be collected in Feb - March 2012.

ART - $121 (27 Feb)
STI ETF - $275 (14 Feb)
ST Eng - $375 (17 May)

Recent Stock Actions: Ascendas India Trust

Added on to my existing holdings in AIT today. I think it largely remains a sound business trust with relatively attractive yield of around 8%. I will continue to slowly pick up stocks where I think there is value.

Recent Stock Actions: ST Engineering

Just added on to my existing holdings in ST Engineering today. My motivations for adding on to the stock were the same as when I first invested in ST Engineering previously. Stable, relatively good dividend yield for a blue chip at around 5% and fairly resilient business model. ST Engineering typically pays out most or almost all of their earnings in dividends.

The fall in price recently makes the stock more attractive for me. I understand that ST Engineering is also making progress in their marine sector, which can prove to be lucrative in the long run.

As the market uncertainty and volatility continues, I'm going to slowly nibble and reinvest some of the funds that I receive from the sale of my unit trusts into fundamentally sound stocks.

Dividends in Nov/Dec 2011

I usually receive little dividends in Nov/Dec as most of my stocks give out their dividends in the May or Sept period. Nevertheless, just a post to note down the dividend payouts from my holdings. The actual payout dates are in brackets.

Ascendas India Trust - $91.20 (25 Nov)
Boustead S'pore - $200 (16 Dec)

Total - $291.20