Phillip Securities Research in a Jan 11 research report says: "Being one of the largest players in the industry, we opine that STE would be able to ride on the long term growth in demand for MRO work. STE would also benefit from the shift in MRO work towards lower cost bases.
"While the Aviation MRO industry could experience some near term headwinds, we expect STE to sail through comfortably with its exposure to the less cyclical defence business and strong order book of $11 billion. Long term Aerospace contracts worth at least $3.7 billion, by our estimates, would provide future revenue visibility.
"At the current price, STE is trading below its historical average P/E multiple of 20X and only slightly above levels reached during the past 2 crisis levels of 15X. The stock would also yield >5% on our forecasted dividends, which looks favourable against a paltry 10yr SGS bond yield of 1.6%. Target price of $3.13. ACCUMULATE."
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