(See also: ST Engineering’s FY16 earnings dip 8% to $484.5 mil on one-off charge)
In FY16, electronics clinched $2.3 billion of contracts, up 43% on year. Lim says order momentum is expected to continue this year as it is in a sweet spot of rising demand for data analytics, machine-to-machine communications and urbanisation trend.
With no losses from China, land systems’ 4Q16 profit before tax rose 90% to $24 million from year ago. Contribution from the US rose from 22% in FY15 to 27% in FY16, driven by sales of F&B trucks and road construction vehicles.
Meanwhile, the shipbuilding division posted losses in 4Q16 although it won $138 million of contracts in comprising some para-defence jobs.
Aerospace 4Q16 profit before tax grew 1% to $86 million from a year ago, helped by higher milestone completion of projects. Relatively low oil prices and higher interest rates could also sustain demand for airframe MRO, adds Lim.
“We lift our FY17-18F EPS by 1-3% to reflect better land systems performance. Key risk to our call is a sudden plunge in the US economy,” concludes Lim.
As at 11.11am, shares of ST Engineering are up 15 cents at $3.55.
