ST Engineering (S63) AI Stock Analysis

• Market Cap: $24.77B
• Dividend Yield: 2.15%
• Average Volume (3M): 6.13M
• Price to Earnings (P/E): 35.3
• Beta (1Y): 0.75
• Revenue Growth: 11.63%
• EPS Growth: 19.71%
• Country: SG
• Employees: 27,359
• Sector: Industrials
• Sector Strength: 90
• Industry: Aerospace & Defense
• EPS (TTM): N/A
• Shares Outstanding: 3,122,495,000
• 10 Day Avg. Volume: 7,311,880
• 30 Day Avg. Volume: 6,125,130
• PEG Ratio: -3.51
• Price to Book (P/B): 4.35
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -116.16
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $8.01
• Price Target Upside: 1.92% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 83 Outperform
• Price Target: ―

ST Engineering demonstrates strong financial performance and positive earnings call highlights, with impressive revenue and profit growth, a robust order book, and commitment to shareholder returns. Technical analysis supports an upward price trend, although the high P/E ratio suggests potential overvaluation. Challenges in specific segments exist but are overshadowed by overall business strength, making the stock a promising investment with some caution warranted regarding valuation.

Positive Factors

Defence Spending

Defence poised for upside surprise as surging international procurement meets years of groundwork in marketing, R&D.

Growth Targets

STE unveiled aggressive growth targets ahead, aiming to achieve S$17b group revenue by 2029 with potentially even faster net profit growth.

Order Backlog

Record order backlog underpins earnings visibility, and a double-digit earnings CAGR is projected over the medium term.

Negative Factors

Aviation Supply Chain

Trade war leading to higher input costs and margin erosion, aviation supply chain disruptions could adversely impact its commercial aerospace business.

Valuation

Valuation appears rich and analyst prefers a better entry point.

ST Engineering Business Overview & Revenue Model

Company Description

ST Engineering (S63), short for Singapore Technologies Engineering Ltd, is a global technology, defense, and engineering group headquartered in Singapore. The company operates through four key sectors: Aerospace, Electronics, Land Systems, and Marine, offering a wide range of products and services that cater to both commercial and defense markets. ST Engineering is renowned for its innovations in engineering solutions and commitment to sustainability, providing cutting-edge technologies and integrated solutions to its global clientele.

How the Company Makes Money

ST Engineering generates revenue through a diverse portfolio of products and services across its four main sectors. In the Aerospace sector, the company earns from aircraft maintenance, repair, and overhaul (MRO) services, as well as the manufacturing of aircraft components. The Electronics sector contributes through the sale of advanced communications, public safety, and cybersecurity solutions. Meanwhile, the Land Systems sector focuses on providing automotive and weapons systems for military and commercial purposes. The Marine sector is involved in shipbuilding, repair, and engineering solutions. Additionally, ST Engineering benefits from significant partnerships and contracts with governments and private sectors worldwide, which bolster its earnings and ensure a steady revenue stream.

ST Engineering Financial Statement Overview

Summary

ST Engineering exhibits strong financial health across all statements. The company has shown impressive revenue and profit growth, indicating a positive trajectory. The balance sheet reflects stability with no debt, enhancing financial flexibility. Cash flow performance is exceptional, with significant increases in free cash flow and strong cash conversion metrics, underscoring the company's ability to generate and manage cash effectively. Overall, the financial statements depict a well-managed and financially solid company with a bright outlook.

Income Statement

The company's income statement reflects strong performance, with a consistent upward trend in total revenue, which grew by 11.6% in the latest year. Gross profit margin improved slightly to 19.3%, and net profit margin increased to 6.2%. EBIT and EBITDA margins also saw positive growth, indicating efficient operations. The consistent revenue and profit growth are commendable, showcasing robust business expansion.

Balance Sheet

The balance sheet indicates a solid financial position with no total debt as of the latest report, significantly improving the debt-to-equity ratio. The equity ratio stands at 16.5%, reflecting a stable asset base. However, the return on equity is moderate at 26.3%, suggesting room for efficiency improvements. Overall, the company maintains financial stability with a strong equity position.

Cash Flow

Cash flow analysis shows significant improvement, with a 108.4% increase in free cash flow, demonstrating excellent cash generation capability. The operating cash flow to net income ratio is strong at 2.4, indicating effective cash management. Free cash flow to net income ratio is also robust at 1.7, reflecting efficient use of cash to generate profits. These metrics highlight strong cash flow health and operational efficiency.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
11.28B	10.10B	9.04B	7.69B	7.16B
	Gross Profit
2.17B	1.97B	1.70B	1.50B	1.51B
	EBIT
1.01B	840.11M	657.92M	746.10M	736.46M
	EBITDA
1.62B	1.42B	1.22B	1.06B	932.23M
	Net Income Common Stockholders
702.26M	586.47M	535.01M	570.54M	521.84M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
430.64M	353.34M	601.75M	815.92M	730.62M
	Total Assets
16.22B	15.38B	14.96B	10.67B	10.21B
	Total Debt
0.00	6.11B	6.53B	2.12B	2.05B
	Net Debt
-430.64M	5.75B	5.96B	1.30B	1.32B
	Total Liabilities
13.27B	12.63B	12.31B	8.01B	7.64B
	Stockholders Equity
2.67B	2.46B	2.40B	2.41B	2.29B
Cash Flow		Free Cash Flow
1.17B	562.64M	-89.83M	676.20M	1.20B
	Operating Cash Flow
1.72B	1.18B	673.10M	1.10B	1.49B
	Investing Cash Flow
-414.33M	-200.76M	-4.57B	-453.48M	-295.18M
	Financing Cash Flow
-1.22B	-1.23B	3.70B	-567.05M	-913.67M

ST Engineering Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 7.86
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SG:S63, the sentiment is Positive. The current price of 7.86 is above the 20-day moving average (MA) of 7.62, above the 50-day MA of 7.21, and above the 200-day MA of 5.39, indicating a bullish trend. The MACD of 0.22 indicates Positive momentum. The RSI at 63.26 is Neutral, neither overbought nor oversold. The STOCH value of 75.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SG:S63.

ST Engineering Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
S63	83 Outperform	$24.77B	35.29	27.51%	2.15%	11.63%	19.71%
A17U	76 Outperform	S$11.88B	15.02	7.61%	6.55%	-1.52%	313.98%
C07	73 Outperform	S$9.51B	7.52	11.58%	6.08%	-0.21%	-22.52%
U96	70 Neutral	$12.19B	11.97	20.60%	3.12%	-8.88%	8.31%
U11	69 Neutral	$58.79B	9.91	13.43%	4.85%	5.68%	5.92%
E5H	67 Neutral	S$3.17B	6.51	7.27%	3.37%	11.22%	84.13%
Sector *	66 Neutral	$4.49B	12.34	5.40%	248.65%	4.13%	-12.33%

ST Engineering Corporate Events

ST Engineering Prices US$750 Million Notes to Refinance Debt

ST Engineering has announced the pricing of US$750 million in 4.250% Notes due in 2030 through its subsidiary, ST Engineering RHQ Ltd. The proceeds from this issuance will be used to refinance existing borrowings, and the Notes will be offered to institutional and accredited investors in Singapore. This strategic move is expected to enhance the company’s financial flexibility and strengthen its market position.

ST Engineering Secures $4.4 Billion in Contracts for Q1 2025

ST Engineering announced securing $4.4 billion in new contracts during the first quarter of 2025, with significant contributions from its Commercial Aerospace, Defence & Public Security, and Urban Solutions & Satcom segments. The contracts highlight the company’s strong market positioning, particularly in the aerospace sector with multi-year maintenance agreements, and in the defense sector with major digital systems contracts, which are expected to enhance its operational capabilities and market presence.

ST Engineering Updates S$5 Billion Global Medium Term Note Programme

ST Engineering has updated its S$5 billion Global Medium Term Note Programme, allowing for the issuance of various types of notes by its subsidiaries. The proceeds from these notes will be used for funding new capital expenditures, acquisitions, general corporate purposes, and refinancing existing borrowings, enhancing the company’s financial flexibility and strategic growth initiatives.

ST Engineering Unveils FY2025 Dividend Plan and New Policy for FY2026

ST Engineering has announced its dividend plan for FY2025, proposing an increase in the total dividend to 18.0 cents per share, reflecting its strong financial outlook. The company also introduced a new dividend policy effective from FY2026, aiming to enhance shareholder returns by distributing about one-third of its year-on-year net profit increase as incremental dividends, with a commitment to quarterly payouts.

ST Engineering Optimizes U.S. Airframe MRO Operations

ST Engineering has announced a strategic capacity transition plan for its U.S. airframe MRO operations to enhance competitiveness in the global aviation market. The plan involves consolidating operations from its VT Mobile Aerospace Engineering subsidiary in Alabama to other facilities in Florida and Texas, aiming to optimize its network and modernize facilities. This transition will occur over the next few months, with efforts to ensure service continuity and support for affected employees.

ST Engineering Secures $4.3 Billion in Contracts, Expands Market Reach

ST Engineering announced securing $4.3 billion in contracts in the fourth quarter of 2024. The Commercial Aerospace segment accounted for $1.8 billion, bolstered by robust demand for Maintenance, Repair & Overhaul services and aerostructure solutions. In the Defense & Public Security segment, the company achieved a significant international contract with Kazakhstan Paramount Engineering for an amphibious armored vehicle, marking its entry into the Central Asian market. These wins demonstrate ST Engineering’s strong market position and its strategic market expansion efforts.