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ST Engineering (SG:S63)
SGX:S63

ST Engineering (S63) AI Stock Analysis

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ST Engineering

(SGX:S63)

Rating:83Outperform
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 (S63) vs. iShares MSCI Singapore ETF (EWS)

ST Engineering Business Overview & Revenue Model

Company DescriptionST 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 MoneyST 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 Earnings Call Summary

Earnings Call Date:May 20, 2025
(Q4-2024)
|
% Change Since: 5.93%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
ST Engineering reported a strong financial performance for 2024, with significant growth across key financial metrics, a record order book, and increased dividends, indicating a positive outlook. Challenges remain in the Urban Solutions & Satcom segment, but early signs of recovery are noted.
Q4-2024 Updates
Positive Updates
Impressive Financial Performance
ST Engineering reported a 12% growth in revenue to $11.3 billion, 11% growth in EBITDA to $1.6 billion, 18% growth in EBIT to $1.1 billion, and 20% growth in net profit to $702 million for the full year 2024.
Record Order Book
The Group ended the year with a robust order book of $28.5 billion, with $8.8 billion expected to deliver in 2025, providing visibility for future revenue.
Commercial Aerospace Growth
Commercial Aerospace revenue grew 12% to $4.4 billion, with EBIT improving 19% to $400 million. The segment secured $4.7 billion of new contracts in 2024.
Defence & Public Security Expansion
DPS revenue grew 16% to $4.9 billion, with EBIT increasing 15% to $636 million. DPS secured $5.3 billion of new contracts in 2024.
Debt Reduction
Borrowings reduced by 5% year-on-year from $6.1 billion to $5.8 billion, with the gross debt to EBITDA leverage ratio reducing from 4.2 times to 3.6 times.
Increased Dividend Payout
The Board recommended a final tax exempt cash dividend of $0.05 per ordinary share, increasing the total dividend for the year to $0.17 per share.
Negative Updates
Urban Solutions & Satcom Segment Challenges
USS segment revenue grew only 1% to close to $2 billion. The Satcom sub-segment faced vast challenges and its transformation is ongoing, though there are early signs of recovery.
PTF Business Volume Impact
Existing aircraft fleet remain in service longer due to OEM delays, impacting PTF business volume. However, capacity is being optimized by increasing airframe MRO revenue.
Company Guidance
The recent call from ST Engineering provided comprehensive guidance for the second half and full year of 2024, highlighting robust financial performance across various metrics. For the second half of 2024, the company reported a 10% year-on-year growth in revenue, 11% in EBITDA, 18% in EBIT, 26% in PBT, and a 20% increase in net profit. For the full year, revenue grew by 12% to surpass $11 billion, with EBITDA rising by 11% to $1.6 billion and EBIT by 18% to $1.1 billion. PBT increased by 23% to $863 million, while net profit climbed 20% to $702 million. The strong results were largely attributed to effective execution of the company's $28.5 billion order book, with $8.8 billion slated for delivery in 2025. The revenue was diversified across segments, with Commercial Aerospace contributing 39%, Defence & Public Security 44%, and Urban Solutions & Satcom 17%. ST Engineering also reported significant contract wins, totaling $12.6 billion for the year, and a reduction in borrowings by 5% to $5.8 billion, leading to an improved gross debt to EBITDA leverage ratio of 3.6 times. The company announced a final dividend of $0.05 per share, bringing the total dividend for 2024 to $0.17 per share, reflecting its strong financial position and commitment to shareholder returns.

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
85
Very Positive
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
78
Positive
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
90
Very Positive
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 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
11.28B10.10B9.04B7.69B7.16B
Gross Profit
2.17B1.97B1.70B1.50B1.51B
EBIT
1.01B840.11M657.92M746.10M736.46M
EBITDA
1.62B1.42B1.22B1.06B932.23M
Net Income Common Stockholders
702.26M586.47M535.01M570.54M521.84M
Balance SheetCash, Cash Equivalents and Short-Term Investments
430.64M353.34M601.75M815.92M730.62M
Total Assets
16.22B15.38B14.96B10.67B10.21B
Total Debt
0.006.11B6.53B2.12B2.05B
Net Debt
-430.64M5.75B5.96B1.30B1.32B
Total Liabilities
13.27B12.63B12.31B8.01B7.64B
Stockholders Equity
2.67B2.46B2.40B2.41B2.29B
Cash FlowFree Cash Flow
1.17B562.64M-89.83M676.20M1.20B
Operating Cash Flow
1.72B1.18B673.10M1.10B1.49B
Investing Cash Flow
-414.33M-200.76M-4.57B-453.48M-295.18M
Financing Cash Flow
-1.22B-1.23B3.70B-567.05M-913.67M

ST Engineering Technical Analysis

Technical Analysis Sentiment
Positive
Last Price7.86
Price Trends
50DMA
7.21
Positive
100DMA
6.26
Positive
200DMA
5.39
Positive
Market Momentum
MACD
0.22
Positive
RSI
63.26
Neutral
STOCH
75.95
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

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
SGS63
83
Outperform
$24.77B35.2927.51%2.15%11.63%19.71%
76
Outperform
S$11.88B15.027.61%6.55%-1.52%313.98%
SGC07
73
Outperform
S$9.51B7.5211.58%6.08%-0.21%-22.52%
SGU96
70
Neutral
$12.19B11.9720.60%3.12%-8.88%8.31%
SGU11
69
Neutral
$58.79B9.9113.43%4.85%5.68%5.92%
SGE5H
67
Neutral
S$3.17B6.517.27%3.37%11.22%84.13%
66
Neutral
$4.49B12.345.40%248.65%4.13%-12.33%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SG:S63
ST Engineering
7.86
3.95
100.97%
SG:E5H
Golden Agri-Resources
0.25
>-0.01
-2.34%
SG:U11
UOB
35.25
6.55
22.82%
SG:A17U
CapitaLand Ascendas REIT
2.58
0.21
9.09%
SG:U96
Sembcorp Industries
6.83
2.04
42.65%
SG:C07
Jardine Cycle & Carriage
24.06
-1.75
-6.76%

ST Engineering Corporate Events

ST Engineering Prices US$750 Million Notes to Refinance Debt
Apr 29, 2025

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
Apr 28, 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
Apr 1, 2025

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
Mar 18, 2025

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
Mar 6, 2025

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
Feb 6, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.