ST Engineering *Official* (SGX: S63)

Keverus

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start what? i merely said st eng will hit lower by end of the yr. that's all. lets see who is right, who is wrong.

nothing more.

sick of arguing abt st eng. there is no new input whatsoever. round round discussion.

end of year i will come back. ciao for now.
 

dork32

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A blogger who is raking in 6k/mth in dividends. He also started small and build his way up. Anyway, I linked his blog so you may wanna take a look. He has been interviewed on radio and papers before and is a very mysterious person. One of the few bloggers I visit from time to time.

power guy. i will start to read his blog. thanks
 

dork32

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erm... this is STE thread wor hehehe

u want to eat 6 infraction each again? I'm all but happy to do so ^_^

I don't have 70k post count, can always start all over again LOL LOL LOL

please dont argue with him. i enjoy discussing with you. yes we do have some differences here and there which we argue it out. i dont want to lose you.

it is through this sort of posting that you get points
 

ValueInvestor

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cause this is STE thread ma... mr K suddendly put link to his silverlake gains thread... out of topic, so i highlight only

no worries

STE results coming, but I worry wait got earnings shock from their marine or aerospace segment

can only pray for the best

last year already a kitchen sink last 2 quarters as they took many write offs, hope this year no more write offs for STE
 

havetheveryfun

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AK from ASSI is in this counter... once this guy enter... can sleep well at night liao. This counter steady de...

Saturday, July 18, 2015
'I added to my long position in ST Engineering which is one of the founding members of my investment portfolio. Although they will pay only 75% of their earnings as dividends instead of 100% when I first became an investor donkey years ago at $1.55 a share, it doesn't bother me. The fact that the company has grown and enlarged their footprint in the USA over the years is good news to me now with the US$ set to strengthen against the S$.'

http://singaporeanstocksinvestor.blogspot.sg/2015/07/6m-2015-passive-income-from-non-reits.html

he would be sad to hear that from a regular reader of his blog.. http://singaporeanstocksinvestor.blogspot.sg/2014/12/investing-for-income-and-position.html

he also have losing counters (or counters whose value not unlocked yet) such as Marco Polo marine.. just saying that don't just follow blindly.
 

Perisher

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he would be sad to hear that from a regular reader of his blog.. http://singaporeanstocksinvestor.blogspot.sg/2014/12/investing-for-income-and-position.html

he also have losing counters (or counters whose value not unlocked yet) such as Marco Polo marine.. just saying that don't just follow blindly.

True true.
1st, I'm not a regular reader of his blog, once in awhile.
2nd, I was in STE way before I even saw his blog post (on STE which was very recent), just that he reaffirm some points which I agree with
3rd, I'm certainly not following him blindly, in fact, I read everything, digest then decide.
4th, if warren buffett is buying the stock after you have bought it and at a higher price, you can sleep well at night no? I see why you think it's sad though.
5th, yes, never ever ever follow someone blindly.
 

havetheveryfun

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True true.
1st, I'm not a regular reader of his blog, once in awhile.
2nd, I was in STE way before I even saw his blog post (on STE which was very recent), just that he reaffirm some points which I agree with
3rd, I'm certainly not following him blindly, in fact, I read everything, digest then decide.
4th, if warren buffett is buying the stock after you have bought it and at a higher price, you can sleep well at night no? I see why you think it's sad though.
5th, yes, never ever ever follow someone blindly.

yep sure.. just saying that the earlier bolded sentence might lead some people new to investing down the wrong way..

for 4th regarding warren buffet.. not everyone can sleep well at night. e.g If I know warren buffet says he bought 10-50 stocks but I can only buy 1-2 of all of those stocks he bought.. I would still be worried.
 

Perisher

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yep sure.. just saying that the earlier bolded sentence might lead some people new to investing down the wrong way..

for 4th regarding warren buffet.. not everyone can sleep well at night. e.g If I know warren buffet says he bought 10-50 stocks but I can only buy 1-2 of all of those stocks he bought.. I would still be worried.

I agree. Sorry if it mislead anyone.
I think US market quite easy and cheap to diversified. If he buy 10-50, I can match at least half but no point, might as well buy BRK.B.
 

ValueInvestor

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ValueInvestor

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ST Engineering’s electronic arm bags contracts worth about $424 million in 2Q2015

By Amy Tan / TheEdge | July 20, 2015 : 6:12 PM MYT
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SINGAPORE (July 20): Singapore Technologies Engineering (ST Engineering) says its electronics arm has secured a total of about $424 million in contracts in 2Q2015.

The contracts were for Rail Electronics & Intelligent Transportation, Satellite & Broadband Communications, as well as Advanced Electronics & Information Communications Technologies (ICT) solutions.

It secured Rail Electronics & Intelligent Transportation contracts worth roughly $55 million from local and overseas customers in China, India, the Middle East, North and South America and Taiwan. Work has started on these projects and they will be completed progressively till end-2020.

The firm received contracts totaling about $84 million from government, telecom and enterprise users worldwide to supply satellite network equipment, earth stations and man-pack terminals. These projects will be delivered over the next few years.

It also clinched about $285 million of Advanced Electronics & ICT contracts, which will be delivered over the next six years.

The contracts are not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of the company for the current financial year.

In addition, the group says its Galaxy M2M Communications System, which provides a single platform for multiple smart city and Internet of Things applications, has “gained the acceptance of customers” in the US, UK, New Zealand and Israel. It says its intelligent rail transit products have also gained traction in 21 cities outside Singapore, including Toronto, Washington DC and Brazil.

ST Engineering shares closed 0.3% higher at $3.41.
 

sandwicher

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A blogger who is raking in 6k/mth in dividends. He also started small and build his way up. Anyway, I linked his blog so you may wanna take a look. He has been interviewed on radio and papers before and is a very mysterious person. One of the few bloggers I visit from time to time.

$13k/month in dividends actually. REIT + non-REIT dividends (6+7k). Very very impressed
 

Keverus

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over-zealous investors enter st eng while more rational investors realize the problem prevalent at st eng. nice exit at above 3.40, using the contract win news.
 

Keverus

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An in-depth view on ST Engineering-is it a stock worth buying?

Quick answer, no.

But it is a solid dividend yield blue chip index counter, cried the supporters! Well, that doesn’t account for anything. If you are investing in anything whereby you are given “high” dividend but your capital/principal is falling, then you are essentially being paid your dividends using your capital. In other words, the dividends are actually your own money. So lo and behold, whatever “attractive” dividend yield suddenly doesn’t seem that great anymore.

Besides, is ST Engineering that great a dividend stock? Well, truth is, it isn’t. A really good dividend stock is one that is able to grow its dividends. It paid 15 cents a share in 2014, which is lesser than 2013 when it paid 16 cents. In 2015, the board has announced that dividends will be unchanged at 15 cents. That's good news isn’t it, since dividend is unchanged. Wrong! Because of inflation, you have actually received lesser dividend in 2015. To make thing worse, if you had held the stock from 2014 to 2015, you would had suffer capital losses as well.

And here’s the scary thing-it is giving 15 cents per share dividend while it is only earning 17 cents per share. Now, if you are only retaining 2 cents per share for your own company’s usage…how is that realistic? It represents two things. One, the company could be digging its hands into the coffers to sustain the dividends. Two, the company has next to no interest in growing the company. Which we saw, since the last quarter reported fall in quarterly revenue of 2.6% year-on-year, leading to a fall in earnings year-on-year. Think for a moment. If this is the case, how can then, the company continue to sustain the “high dividend”? The business is shrinking and yet you have little capital to grow it, while at the same time, you need to give out high dividends. The shortfall has to be taken from somewhere. To complicate matters, two of ST Engineering’s main businesses (aerospace and marine) are in poor industrial conditions for the year and likely the next as well.

Blue chip index counters are not infallible. I could quote Noble, but people would cry unfair as it was hit by fraud. Let’s then take a look at Genting. It has fallen from highs of $1.30 to current levels of 90 cents. Nobody reckon that Olam could face a crisis as huge, to the extent that it had to be white knighted out of the situation. A possible counter that can be used for comparison would be Sembcorp Industries. Like ST Engineering, it doesn’t just focus on one business. Like ST Engineering, it has one of its core business hit by oil. Sembcorp Industries has sunk from $5.44 in 2013 to the current levels of $3.80. ST Engineering itself, was sitting at $3.76 on 11 July 2014. Today, it sits at $3.31, representing a 11.96% fall in value.

But ST Engineering has won so many contracts! It is supported by SAF! It can only go up! Well, news flash. It has been consistently winning contracts. But yet we have seen the share price slide down over the years. Also, just because it provides for the SAF doesn’t mean it will definitely be going up up and away. It is a fact that SAF is shifting towards a more technology-based defence, but think about it-at the end of the day, Singapore doesn’t run a professional army. The defence budget increases on an annual basis, but at one point, it has to slow down. A nation like Singapore would rather focus additional government budget it has towards developing its main allure as an economic hub, not pumping the defence by ridiculous amounts year after year. The tie-in with SAF guarantees revenue, but this revenue is not sufficient to propel ST Engineering to greater heights.

So where is ST Engineering headed? Well, the direction is definitely down. How far down? Well, this is very tricky. First of all, let’s take a look at some numbers. If dividend yield is promised to be at $0.15 per share, it represents a 4.5% dividend yield at current price. Unfortunately, this is not sustainable, for reasons mentioned throughout this article. The only saving grace is that ST Engineering is sitting on a pile of cash, $1.68 billion in fact. But hold on, it is also faced with $1.08 billion of debts. The nett cash position is still $600 million, healthy, but would it be sufficient? For a company dealing in aerospace, marine and also defence technology, $600 million is a nice pile to sit on, but considering that the net EPS is $0.02, it leaves the company on a pretty thin buffer. Also to note is that one year ago, ST Engineering was sitting on $700 million.

The next we have to take a look at PE. ST Engineering currently trades at over 19.5x PE. For a company that has little growth potential, the PE is a tad too high. A more acceptable PE would probably be 15-17x. However, it is also a little difficult to price ST Engineering too low, because then the dividend yield would essentially run up too high, making it an attractive yield counter. Investors come in, the price is thus pushed up again. As such, I see ST Engineering being downgraded to 18-18.5x PE (just a little lesser than now). It should see the price of $3.06 to $3.15. The 52 week low this counter has seen is $3.14, so this pricing is not entirely far-fetched. Remember, if EPS falls, then this new price would actually then reflect a higher PE again.

Impossible! It is un-imaginable for ST Engineering to sink so low! Well, times change. The world is constantly changing. Let’s take a look at some case studies, shall we? We can re-visit Genting. Like ST Engineering, it was thought to be a defensive, all-weather and exclusive stock. In Jan 2014, it was trading at $1.50. Fast forward to today, it trades at under 90 cents, representing a 40% plunge in about 1.5 years. Sembcorp Industries? In Jan 2014, it was trading at $5.25 and today, it trades at $3.84, a 27% fall in about 1.5 years. ST Engineering has the same trend; trading at $3.92 in Jan 2014, currently at $3.31, representing at 15.5% fall in about 1.5 years.
But hold your horses. ST Eng’s decline requires a catalyst. It is currently trading in the range of $3.20 to $3.35, ie range-bound. The $3.20 support is a strong one; likewise, the $3.47 resistance is also a strong one. The slip in the stock price would come when the next quarter results are announced. Any announcement that is less than strongly positive should trigger the downtrend again. Results are likely to be muted with marine and aerospace likely to continue to be a drag. The recent aerospace won has no impact on financial numbers for this year, as announced by ST Engineering itself. We should see the $3.20 level being broken as the stock price slide towards the range of $3.06 to $3.15.

In the event the next quarter results somehow turn out to be fantastic, expect some cheer and the price to move north. Nonetheless, this would be short-lived and the price should slide back to the range of $3.20 to $3.35 before the next quarter announcement again.
 
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