Stock Analysis 2: ST Engineering 2015Q1

Market Price (2015-1-25) = $3.39

Earnings
Approx. EPS: $0.179 (TTM)
Approx. DPS: $0.04 + $0.08 + 0.04 = $0.16 (TTM)

Approx DPS, assuming reduced 75% payout ratio = $0.134
Order Book: $13.2B

Ratios

P/E: 18.9
Yield: 4% [based on 75% payout]

Profitability

ROE: 27.2% [Avg for SG blue chips is 11.8%]
Asset Turnover: 0.8 [Avg for SG blue chips is ~0.5]
Net Income Margin: 8.43 [Comparable]

Balance Sheet

Current Ratio: 1.41
Debt To Equity: 0.47 [Warren Buffet's advocate <0.5 More than 2 is bad.]
NAV: $0.6286

Additional Info

Biannual distributions in Apr/Aug. Management has indicate intention to reduce dividend payout ratio to 75%.

Personal Opinion:

- High P/E ratio when the STI average 14.
- High P/B ratio of 5.3
- Pressure in aerospace and possibly marine sector in the coming quarters.

+ Government Backed. Temasek Holdings own ~50% of the company.
+ Insider Buying: Temasek brought in recently at $3.46. Company has been buying back since Dec, in the 3.2x to 3.3x range.
+ High profitability ratio, high barrier of entry for defense industry.

Even though it's below its historical P/E at the moment, I don't think it's selling cheap. Will wait for lower 3s and monitor its upcoming results.