CGS-CIMB analyst Lim Siew Khee upgraded the rating on ST Engineering to a Buy today, setting a price target of S$9.50.
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Lim Siew Khee has given his Buy rating due to a combination of factors including ST Engineering’s strategic exploration of options for its iDirect business, which has been a significant concern due to its financial underperformance. The company has taken a non-cash impairment on iDirect, which is expected to result in annual amortization savings and potential further savings if divestment occurs. This move is seen as an opportunity to buy, as the share price may weaken temporarily due to the impairment.
Additionally, ST Engineering’s strong performance in securing international defense contracts provides a positive outlook for future growth. The company’s order book has grown significantly, with potential contracts in various regions, which supports the earnings growth. The target price has been raised to S$9.50, reflecting these strategic moves and growth prospects, while the potential divestment of iDirect and defense contracts are seen as key catalysts for the stock’s performance.
In another report released today, DBS also upgraded the stock to a Buy with a S$9.40 price target.