STE

STE: MS d/g to E/w from O/w, TP $4.00 from $3.70, noting that valuation is full. Add that grp lacks catalysts and could trade in a narrow band in the near term. Concerned about: 1) weaker margin as the company ramps up new businesses; 2) lower earnings growth between 2012 and 2014; and 3) weakening USD affecting earnings. Valuation full at 19.8x forward P/E, more than 1 standard deviation vs. its 5yr avg of 16.9x. The forward P/E premium for STE vs MSCI Singapore portfolio also above the historical avg of 25% at 49%