ST Engineering wooing back investor confidence: OCBC
Its new multi-million defence contracts should start to clear doubts that came with its recent blacklisting in India.
STE's subsidiary ST Kinetics was barred from doing business in India for the next decade, which for a time has had investors wary over its ability to score new defence contracts. But its recent win to build patrol vessels for the Royal Navy of Oman, among other brewing contract leads like one for the United States marines, are proving skeptics wrong.
Here's more from OCBC:
ST Aerospace won $540m of new contracts. ST Engineering (STE) announced that its aerospace arm, ST Aerospace, has secured a total of ~$540m worth of contracts in 1Q12. STE added that these contracts are to be carried out at its maintenance, repair and overhaul (MRO) locations around the world. Also included in the new contacts are passenger-to-freighter conversions of 15
Boeing 757-200 aircraft.
S$1.5b of new orders in 1Q12. Together with its recent announcements, STE has announced a total of ~S$1.5b worth of new orders in 1Q12. STE earlier reported that in 1Q12, its electronics segment won a total of ~S$100m of new contracts while its marine arm was awarded a contract worth €534.8m (~S$880m) to build four patrol vessels for the Royal Navy of Oman. With the strong order flow in 1Q12, STE’s robust S$12.3b order book at the end of FY11 has likely grown further by end-1Q12.
Restores investors’ confidence in defence sales. The ~S$880m contract to build patrol vessels for the Royal Navy of Oman, in particular, should restore investors’ confidence in STE’s defence sales. This comes after news reports of the Indian Ministry of Defence blacklisting six defence firms, including STE’s subsidiary ST Kinetics (STK), from doing business in India over the next 10 years. Furthermore, STE has vigorously maintained its innocence of any wrongdoing resulting in this disbarment.
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