Excerpts from analysts' reports

Deutsche Bank has 'buy' call on ST Engineering and S$4.30 target

Analyst: Kevin Chong

Stability and diversification 
STEngg_5.14At the investor meetings (at dbAccess Asia Conference 2014), STE highlighted how its diversified operations in defence, government and commercial markets have provided stability for the group over the years. 

Its exposure to the four divisions in Aerospace, Electronics, Land Systems and Electronics has also contributed to its operational resilience. STE’s balance sheet remains robust and it is still triple-A rated by Moody’s and S&P.

Its FY13 net profit split was as follows: Aerospace 45%, marine 19%, Land Systems, 16%, and Electronics 23%. 

STEngg_orderbk5.14
 
Order book and dividend policy 
STE’s order book as at 1Q14 stood at a record S$13.4bn, and has more than doubled since 2005, providing healthy visibility for the group.

Management has maintained its guidance for higher revenues and PBT in FY14 vs. FY13, and indicated that 1H14 would be comparable yoy, which implies a stronger 2H14. 
 
On dividends, STE highlighted that its FY13 dividend payout at 80% is healthy and that the reduction from 90% previously was largely to reduce the impact from withholding taxes when funds are repatriated out of the US. 
 







UOB Kay Hian initiates coverage of QT Vascular with 51-c target

Analyst: Andreas Isabel Co, CFA

QT Vascular (QTV) is engaged in the design, assembly and distribution of advanced therapeutic solutions for the minimally-invasive treatment of complex vascular diseases.

Its product portfolio includes two coronary devices and three peripheral devices, one of which is its flagship Chocolate® PTA Balloon Catheter (Chocolate PTA).

It carries out its operations from two locations – Pleasanton, California and Singapore – and has a distribution presence in the US, Europe, Japan and China. 

 QTV_uob5.14

 

INVESTMENT HIGHLIGHTS 

• Initiate coverage with a BUY; target price of S$0.51 represents 36% upside. 

Our target price was derived using a 2015F P/S ratio of 10x, which is based on completed comparable medical device M&A deals beginning 2012. 

The multiple is at the high end of the range, justified by QTV’s revenue-generating product portfolio, strong distribution partnerships and potentially paradigm-changing device in the Drug-coated Chocolate PTA (DCC). 

We also note that a loss-making US medical device company, TriVascular Technologies, was listed on the NASDAQ in Apr 14 at an implied 14x 2013 P/S. 

At 14x, our target price for QTV would be S$0.71 but this is not our base case scenario. 
 


  Full report here.
 

Share Prices

Counter NameLastChange
AEM Holdings3.7300.030
Avi-Tech Electronics0.280-
Best World1.760-
Broadway Ind0.120-
China Sunsine0.4000.005
DISA0.003-
Food Empire0.630-0.010
Fortress Minerals0.370-0.005
Geo Energy Res0.350-0.005
Golden Energy0.790-0.005
GSS Energy0.048-
InnoTek0.4800.020
ISDN Holdings0.400-
ISOTeam0.090-
IX Biopharma0.124-0.001
Jiutian Chemical0.0810.001
KSH Holdings0.350-
Leader Env0.056-
Medtecs Intl0.134-0.002
Meta Health0.025-
Nordic Group0.4700.005
Oxley Holdings0.1540.003
REX International0.2300.005
Riverstone0.620-0.005
Sinostar PEC0.185-
Southern Alliance Mining0.4200.010
Straco Corp.0.4050.010
Sunpower Group0.275-
The Trendlines0.0940.002
Totm Technologies0.099-0.003
UG Healthcare0.189-0.001
Uni-Asia Group0.8200.010
Wilmar Intl4.020-0.030
Yangzijiang Shipbldg1.350-0.030

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