|Latest Forum Topics / ST Engineering Last:3.98 --
Is STE Over Priced!
| ST Engineering Price/Book Value is 5.7x versus SIA' s Price/Book Value of 0.8x?
More than 50% of ST Engineering' s revenue going forward is probably exposed to commercial airline business - their Aerospace division' s commercial airline business, their consolidated revenue from their investment in German based EFW and their recent acquisition of Middle River in the US are all focussed on commercial airline business. The company do not give breakdowns of revenue in the quarterly results. But from press releases during their investment announcements, the estimate is probably there as a ballpark estimate. This should be further ascertained if possible?
So going forward, is STE the same defensive stock which investors had figured is heavily dependent on Singapore government business and other military business?
Looking at their last quarterly, the company seems to be now  very exposed to the global airline business cycles with more than 50% of its annual revenue dependent on airlines and air cargo operators.
Should it not be trading near the SIA Price/Book Value albeit maybe slightly better than 0.8x due to its military businesses component. But the current 5.7x P/BV versus SIA' s 0.8x do warrant some review and thinking by investors?
I think the various investment analyst recommending this stock should do some review and provide some more technical advice.
With the oncoming recession forecast, an airline business down cycle is going to significantly impact ST Engineering! The last down cycle was perhaps in 2008/09....quite some time ago.
We know the STE business would have some sensitivity to the strength of the USD. What if there is a significant depreciation of the USD? Is the parts of business in STE dependent on the USD rate continue to be viable?
Further can STEngineering with its current level of borrowings continue to maintain the dividend yields going forward in the event of an airline down cycle? This is an important question  current investors needs to know!
A lot of questions. Hopefully some enlightened analyst or fellow investor can share their views? Thank you!
|Useful To Me Not Useful To Me