Maybank and RHB Analysts Maintain "Buy" Calls on ST Engineering Following 1QFY2023 Business Update

The Edge Singapore2023-05-16

Maybank Securities' Kelvin Tan has maintained his "buy" call and $4.10 target price on ST Engineering, following the engineering conglomerate's 1QFY2023 business update.For the three months to March, ...

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V K
2023-05-17
V K
Nice

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMaybank and RHB Analysts Maintain \"Buy\" Calls on ST Engineering Following 1QFY2023 Business Update\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-05-16 10:11 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.theedgesingapore.com/capital/brokers-calls/maybank-and-rhb-analysts-maintain-buy-calls-st-engineering-following-1qfy2023><strong>The Edge Singapore</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Maybank Securities' Kelvin Tan has maintained his \"buy\" call and $4.10 target price on ST Engineering, following the engineering conglomerate's 1QFY2023 business update.For the three months to March, ...</p>\n\n<a href=\"https://www.theedgesingapore.com/capital/brokers-calls/maybank-and-rhb-analysts-maintain-buy-calls-st-engineering-following-1qfy2023\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"S63.SI","symbol_name":"新科工程","start_time":0,"source_url":"https://www.theedgesingapore.com/capital/brokers-calls/maybank-and-rhb-analysts-maintain-buy-calls-st-engineering-following-1qfy2023","article_id":"1104822190","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1104822190","pubTimestamp":1684203063,"sourceInfo":{"source_id":"lsy1655096814160","name":"The Edge Singapore"},"weMediaInfo":null,"summary":"Maybank Securities' Kelvin Tan has maintained his \"buy\" call and $4.10 target price on ST Engineerin","collect":0,"end_time":0,"defaultTopTitle":"theedgesingapore.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"S63.SI":"新科工程"},"translate_title":"Maybank和RHB分析师在2023财年第一季度业务更新后维持对ST Engineering的“买入”呼吁","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"S63.SI":0.9},"content_text":"Maybank Securities' Kelvin Tan has maintained his \"buy\" call and $4.10 target price on ST Engineering, following the engineering conglomerate's 1QFY2023 business update.For the three months to March, ST Engineering reported revenue of $2.3 billion, up 13% y-o-y, with growth across all its business segments, including TransCore, its US-based traffic management unit acquired for US$2.7 billion.However, the revenue thus far is \"marginally\" below Tan's estimates.Nonetheless, underpinned by a record order book of $25.4 billion, he is optimistic that the current FY2023 is a turnaround point for ST Engineering as it transforms from a dividend yield play to one of \"durable and sustainable growth.\"\"We believe all three of STE’s business divisions are on track for margins to recover in FY2023,\" writes Tan in his May 16 note.Tan describes ST Engineering, which is likely to increase its order book to $27 billion by end of the year, as an inexpensive long-term entry opportunity, with reduced debt and potentially higher earnings a key re-rating catalyst.RHB Bank Singapore's Shekhar Jaiswal, similarly, has kept his \"buy\" call on the stock, along with a target price of $4.05.\"We continue to like ST Engineering for its strong revenue visibility and defensive dividend outlook,\" says Jaiswal, who expects the company to deliver a 17% profit CAGR between FY2022 and FY2025.He is also cheered by the company's ability to produce significant free cash flow, which will lead to a gradual drop in its net debt-to-equity ratio during 2023-2025.ST Engineering used to be debt free but took on debt to fund the acquisition of Transcore.In her May 15 note, CGS-CIMB's Lim Siew Khee expects ST Engineering to report stronger earnings for the coming second half of the year, with better contributions from urban solutions and satellite communications projects.In addition, supply chain pressure is seen to be relieved in 4QFY2023, which will further boost earnings, writes Lim, who has kept her \"buy\" call and $4 target price.On the other hand, Citi Research's Jame Osman prefers to stay cautious. He notes the recovery seen in certain key sectors such as aerospace.However, he believes that near term risks, such as component and labour shortage, will remain a bugbear.\"We retain our cautious view primarily as we believe market expectations for near-term earnings growth appear too optimistic and may not adequately discount risk factors,\" writes Osman in his May 15 note, as he maintains his \"sell\" call.Osman believes that his target price of $3.35, tied to 22x FY2023 earnings, has already priced in \"positive narratives\" including the strong order book and air travel recovery.Analysts at Maybank Securities and DBS Group Research have lowered their target prices on UMS Holdings to 94 cents and $1.20 respectively, in anticipation of a weaker quarter following the company’s 1QFY2023 ended March results announcement.For its 1QFY2023, UMS reported a patmi of $17.4 million, higher than Maybank analyst Jarick Seet’s estimate of $14.5 million. Its semiconductor integrated system sales remained strong in 1QFY2023, surging 37% y-o-y to $40.9 million. Component sales revenue, however, was down 26% to $32 million.For 2QFY2023, Seet forecast UMS to record 15%-20% decline q-o-q in sales of components and integrated systems on the back of lower demand. “We think 2QFY2023 will be the bottom as we believe demand will pick up in 2HFY2023,” he adds.DBS’s Ling Lee Keng echoes Seet’s sentiment — the analyst is hopeful of a stronger 2HFY2023 and a recovery in 2024 on the back of strong recovery in the semiconductor industry. She cites a forecast by consulting firm Gartner, which predicts a global semiconductor market rebound of 18.5% y-o-y in 2024.That said, Ling notes that the industry outlook is remaining soft in the near term, expecting the worldwide semiconductor shipments to dip further in the coming months. As at March, shipment data had eased 23% from the peak in May 2022 to US$39.8 billion. There may be another 10% to 20% drop in the months ahead based on historical trends, the analyst points out.“However, the longer-term uptrend remains intact. Drivers would include the growing semiconductor content across technology nodes, continued advancement of leading-edge technologies, increasing investment in legacy nodes and innovation and growth of new enabling technologies such as artificial intelligence,” says Ling.Maybank’s Seet points out that UMS’s new customer may delay its ramp up due to weak semiconductor demand. As a result, he believes UMS may face higher costs pressures — coupled with a lower revenue base, the company’s margins could decline further in the quarters ahead.The slowdown in order momentum coupled with margin pressure has led DBS to cut its FY2023 and FY2024 earnings forecast for UMS by 29% and 23% respectively. Ling now expects net margins of 21.7% and 23.1% for FY2023 and FY2023, keeping her “buy” call.Although Seet remains optimistic on UMS’s longer term prospects, the analyst believes the share price has not fully priced in the weak near-term performance. Amid the uncertain outlook, Maybank keeps its “hold” call on UMS.As at 9.37am, shares in UMS are trading at an unchanged 92 cents.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9970868694,"gmtCreate":1684287312519,"gmtModify":1684287316051,"author":{"id":"3577323914202336","authorId":"3577323914202336","name":"V K","avatar":"https://static.tigerbbs.com/536d624e5750dcffec704eeed9bc003b","vip":1,"hat":"https://static.tigerbbs.com/ae1f49570794979e009a5efdeb6f4789","crmLevel":8,"crmLevelSwitch":1,"idStr":"3577323914202336","authorIdStr":"3577323914202336"},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9970868694","repostId":1104822190,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":10,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1104822190"}