ST Engineering +0.3%; defensive qualities: CIMB

ST Engineering is up 0.3% at $3.32 at 1:28 pm after reporting 2Q12 net profit rose 10% on-year to $143.1 million.

Earnings were in line with expectations, CIMB says, with 1H12 net profit at 49% of its FY12 estimate, as the company’s defensive qualities emerge, with strength in all divisions. “Having grown its orderbook by 30% to a record $12.7 billion since the Global Financial Crisis, ST Engineering is better prepared for the looming downturn.

Aerospace’s improved margin is a reflection of strong demand and tight supply for MRO services in the U.S., a trend which will continue.” It expects stronger Aerospace margins ahead on better rates from the Americas.

It raises its target to $3.79 from S$3.49, based on 19X P/E from 18X previously, a lower WACC and after raising FY13-14 EPS forecasts. It keeps an Outperform call.

With sell orders clustered at $3.32, its 52-week high and a level it has bounced off several times in recent weeks, coupled with weak volume, the stock seems unlikely to garner enough momentum to push higher.