The contract kicks off immediately, and involves the provision of comprehensive maintenance services on the electrical and mechanical systems of Kallang Paya Lebar Expressway (KPE), South-east Asia’s longest underground tunnel. ST Synthesis will also provide facilities management services for the KPE, a first for the Group.
ST Engineering has been active snagging contracts, winning over S$200m worth of deals in the past two months alone. The Group has record orders of over S$11b. We estimate earnings will contract 1.8% to S$465.2m in FY09 before growing 10.9% to S$516m in FY10. At S$2.41, it trades at 15.5x FY09 and 14x FY10 P/E, while yields remain attractive at over 6.4%. Our target price of S$2.83 is based on DDM.
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