Brokers' take

ST Engineering | BUY (Initiate coverage) Target price: S$4.07 Sept 6 close: S$3.59 RHB Research, Sept 6

ST Engineering's exposure to the commercial and defence industries across four segments creates a defensive business model that is tough to beat. It is the world's largest MRO service provider for aircraft and Asia's leading provider of ICT solutions. Aircraft fleet size growth, rising demand for passenger-to-freighter (P2F) conversions and more spending on Smart Nation initiatives should lead to strong 2018 growth.

Supported by growth in the aerospace and electronics segments, plus land systems' recovery, the group is set to deliver 10 per cent earnings growth in 2018-2019 (2017: +2 per cent). With rising profit, and limited capex requirement, we believe ST Engineering could gradually increase the 2019 dividend/share to S$0.17 (2016: S$0.15). With a dividend yield of 4 per cent, it is as among the few strong dividend-paying blue-chip counters on the SGX with expectations of earnings growth.