ST Engineering: Hold Rating Amid High Valuation Despite Growth Potential

In a report released today, Roy Chen from UOB Kay Hian downgraded ST Engineering (SGGKF – Research Report) to a Hold, with a price target of S$7.37.

Roy Chen has given his Hold rating due to a combination of factors influencing ST Engineering’s current market position. The company’s revenue for the first quarter of 2025 was in line with expectations, showing an 8% year-over-year growth, which indicates a stable performance across its various segments such as Defence & Public Security, Commercial Aerospace, and Urban Solutions & Satcom. However, despite the positive growth outlook and a record-high order book of S$29.8 billion, the valuation of ST Engineering appears to be on the higher side, suggesting that the stock might be overvalued at its current price.
Given these circumstances, Roy Chen believes that while ST Engineering has significant growth potential, the current stock price does not provide an attractive entry point for investors. The decision to downgrade the rating to Hold reflects a cautious approach, waiting for a more favorable valuation before recommending a buy. This stance is further supported by the company’s consistent dividend payouts, which, while stable, do not significantly enhance the attractiveness of the stock at its present valuation.

According to TipRanks, Chen is a 4-star analyst with an average return of 8.7% and a 65.63% success rate. Chen covers the Industrials sector, focusing on stocks such as ST Engineering, Cathay Pacific Airways, and COSCO SHIPPING Ports.