Singapore stock market news :

UOB Research upgrades ST Engineering to BUY with target price set at S$2.83 based on the following reasons :

1. ST Engineering (STE) announces that its aerospace division has secured
a 20-year engine maintenance programme with GE Aviation.

2. US airlines load factor improves in December and the number of aircraft
in storage tops out in October.

We have not adjusted our 2010 numbers but have accorded a higher PE
rating to the stock. The agreement with GE Aviation will provide long-term
earnings continuity and cements STE’s position as a key MRO player with
strong OEM links. Meanwhile, signs of improved load factor in the US along
with a fall in the number of airlines under storage suggest that operational risk
has eased. The company's orderbook now stands at $10.5b, the highest
level in 10 years, but the stock is trading at a mere 0.72x price to orderbook,
implying severe margin compression. This is unlikely to be the case as
material costs have declined and MRO rates will stabilise given improving
load factors. We believe a higher PE rating is justified and accord the stock a
16.5x rating, a slightly higher band than the historical low of 14.5x. We raise
our 12-month price target to $2.83 from $2.40.