ST Engineering (S63) AI Stock Analysis

• Market Cap: S$31.94B
• Dividend Yield: 2.01%
• Average Volume (3M): 4.27M
• Price to Earnings (P/E): 67.2
• Beta (1Y): 0.79
• Revenue Growth: 8.49%
• EPS Growth: 19.65%
• Country: SG
• Employees: 27,359
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 0.14
• Shares Outstanding: 3,122,495,000
• 10 Day Avg. Volume: 3,529,872
• 30 Day Avg. Volume: 4,274,169
• PEG Ratio: -1.63
• Price to Book (P/B): 10.20
• Price to Sales (P/S): 2.13
• P/FCF Ratio: 24.53
• 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: S$11.14
• Price Target Upside: 11.75% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 0.32
• Revenue Forecast (FY): S$13.38B

• Rating: 60 Neutral
• Price Target: S$10.50 ▲(5.32% Upside)
• Action: Downgraded Date: 03/01/26
• Date: Action: Downgraded 03/01/26

The score is driven primarily by solid but not exceptional financials (steady growth and improved cash generation offset by 2025 margin compression and elevated leverage). Technicals add support via a positive longer-term trend and neutral-to-positive momentum, while the overall score is capped by a stretched valuation (very high P/E and modest yield).

Positive Factors

Strong free cash flow growth

An 81.98% jump in free cash flow indicates materially improved cash conversion. Durable FCF supports reinvestment in capacity, M&A, and servicing long-term contracts, enhancing resilience and funding flexibility over a multi‑quarter horizon without relying on new financing.

Diversified, recurring revenue mix

Operations across aerospace, defence, smart-city and marine with long-duration service and support contracts create recurring revenue. This diversification and lifecycle support model reduces dependency on single markets and cushions cyclicality, supporting steadier medium-term cash flows.

Healthy operating margins

Sustained gross and EBITDA margins reflect operational efficiency across engineering and services. These structural margins provide capacity to fund R&D, long-term contracts and through‑life support, enabling competitive pricing and reinvestment even through industry cycles.

Negative Factors

High financial leverage

A 2.18 debt-to-equity ratio signals significant leverage that heightens refinancing and interest-rate risk. Over the medium term this can constrain capital allocation, reduce strategic flexibility for large programs, and amplify earnings volatility if cash flows dip.

Low equity ratio

An equity ratio near 16% implies assets are largely debt-financed, leaving a thinner capital buffer against project overruns or contract delays. Structurally this increases insolvency risk in downturns and may force conservative investment or higher-cost financing.

Revenue timing and program concentration risk

Dependence on multi-year government procurement and large project deliveries creates lumpy revenue recognition and cash flow timing risk. Structural program delays or budget shifts can produce multi‑quarter volatility and complicate forecasting and working capital management.

ST Engineering Business Overview & Revenue Model

Company Description

Singapore Technologies Engineering Ltd operates as a technology and engineering company in Asia, Europe, the Middle East, and the United States. The company operates through Commercial Aerospace, Urban Solutions & Satcom, and Defense & Public Security segments. The Commercial Aerospace segments engages in maintenance, repair, and overhaul of airframe, engines, and components; operates as an original equipment manufacturer for nacelles, composite floorboards, and passenger to freight conversions; and provision of aviation asset management solutions. The Urban Solutions & Satcom segment offers smart mobility, utilities, infrastructure, and urban environment solutions, as well as satellite communication solutions. The Defense & Public Security segment offers public safety, security, defense, critical information infrastructure, and other solutions. It serves customers in the commercial, government, and defense sectors. Singapore Technologies Engineering Ltd was incorporated in 1997 and is headquartered in Singapore.

How the Company Makes Money

ST Engineering generates revenue through diverse streams across its four sectors. In the Aerospace segment, the company earns money from aircraft maintenance, repair, and overhaul (MRO) services, as well as manufacturing aircraft components. The Electronics sector contributes through the provision of cybersecurity products, smart city solutions, and integrated electronics systems for various applications. Revenue from the Land Systems segment comes from the sale of military vehicles, weapon systems, and logistics support services. The Marine sector generates income from building and repairing ships and offshore platforms. Additionally, ST Engineering engages in strategic partnerships and collaborations with government agencies and private enterprises, enhancing its market reach and creating opportunities for long-term contracts and projects, which are crucial for stable revenue generation.

ST Engineering Financial Statement Overview

Summary

Steady 2021–2025 revenue growth and solid operating cash flow/free cash flow in 2023–2025 support fundamentals, but 2025 profitability weakened notably (net margin down to ~3.7% from ~6.2% in 2024) and leverage remains elevated (debt-to-equity ~1.9x), reducing financial flexibility.

Income Statement

Revenue has grown steadily from 2021–2025, with 2025 showing solid mid-single-digit growth. Profitability is positive but has weakened recently: net margin fell to ~3.7% in 2025 from ~6.2% in 2024, and gross and EBITDA margins also compressed versus 2024. EBIT margin remains fairly stable in the high-single-digits, but the sharp drop in net income in 2025 signals higher below-the-line costs and/or one-offs, making earnings quality less consistent year to year.

Balance Sheet

Leverage is the key constraint. Debt-to-equity remains elevated (around ~1.9x in 2025 and above 2x in prior years), indicating a balance sheet that relies meaningfully on debt funding. A positive offset is improving debt levels since 2022–2023 and consistently strong returns on equity (still ~18% in 2025, higher in 2023–2024), suggesting the company is generating attractive returns despite the leverage. Overall, solvency looks manageable but less conservative than peers with lower leverage.

Cash Flow

Cash generation is a clear strength: operating cash flow and free cash flow are solidly positive in 2023–2025, and free cash flow covers a meaningful portion of earnings (about ~68% of net income in 2024–2025). The main weakness is volatility—free cash flow was negative in 2022 and has slightly declined in 2025 (down ~4% year over year), indicating working-capital or investment swings. Still, the overall trajectory from 2022 to 2025 shows improved and sustained cash generation.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	12.35B	11.28B	10.10B	9.04B	7.69B
Gross Profit	2.16B	2.17B	1.97B	1.70B	1.54B
EBITDA	1.60B	1.62B	1.42B	1.22B	1.06B
Net Income	462.77M	702.26M	586.47M	535.01M	570.54M
Balance Sheet
Total Assets	16.03B	16.22B	15.38B	14.96B	10.67B
Cash, Cash Equivalents and Short-Term Investments	576.44M	430.64M	353.34M	601.75M	815.92M
Total Debt	4.83B	5.82B	6.11B	6.53B	2.12B
Total Liabilities	13.11B	13.27B	12.63B	12.31B	8.01B
Stockholders Equity	2.57B	2.67B	2.46B	2.40B	2.41B
Cash Flow
Free Cash Flow	1.07B	1.17B	562.64M	-89.83M	676.20M
Operating Cash Flow	1.58B	1.72B	1.18B	673.10M	1.10B
Investing Cash Flow	117.89M	-414.33M	-200.76M	-4.57B	-453.48M
Financing Cash Flow	-1.62B	-1.22B	-1.23B	3.70B	-567.05M

ST Engineering Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.97
• 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 9.97 is below the 20-day moving average (MA) of 10.06, above the 50-day MA of 9.39, and above the 200-day MA of 8.49, indicating a bullish trend. The MACD of 0.21 indicates Positive momentum. The RSI at 61.35 is Neutral, neither overbought nor oversold. The STOCH value of 48.08 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
BS6	74 Outperform	S$17.50B	10.89	30.76%	3.46%	0.42%	40.48%
C6L	70 Outperform	$21.52B	9.40	14.98%	6.21%	1.91%	14.96%
U96	65 Neutral	$10.52B	11.06	19.65%	4.33%	-6.69%	6.76%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
S63	60 Neutral	S$31.94B	67.18	28.83%	2.01%	8.49%	19.65%
BN4	57 Neutral	S$21.85B	30.08	8.75%	3.29%	-0.62%	34.52%
5E2	56 Neutral	S$7.89B	25.10	4.07%	0.70%	25.68%	―

ST Engineering Corporate Events

ST Engineering Lands Record S$18.7 Billion in Contracts for 2025 on Aerospace and Defence Strength

ST Engineering reported S$4.7 billion in new contract wins for the fourth quarter of 2025, lifting total contract awards for the year to a record S$18.7 billion, a 49% increase from 2024, underscoring a strong rebound in demand across its key business segments. The Commercial Aerospace division secured about S$1.7 billion in contracts spanning nacelle and airframe MRO for Boeing 787 fleets of European and North American airlines, as well as continued robust demand for engine nacelles and composite floor panels tied to rising new aircraft production. Its Defence & Public Security segment booked roughly S$2.5 billion in new deals, including a major order from Singapore’s Ministry of Defence for next-generation Infantry Fighting Vehicles and additional 40mm and 120mm ammunition sales to overseas customers, while the Digital Systems business won a significant contract from Singapore’s HTX to design and develop an Enterprise Integrated Security System for the Singapore Prison Service, alongside further cloud infrastructure service contracts. These wins reinforce ST Engineering’s position as a key defence and aerospace player in Asia, broaden its recurring revenue base and deepen its role in critical national security and digital infrastructure projects, with positive implications for its order backlog and medium-term growth visibility.

The most recent analyst rating on (SG:S63) stock is a Buy with a S$10.50 price target. To see the full list of analyst forecasts on ST Engineering stock, see the SG:S63 Stock Forecast page.

ST Engineering Now Expects Positive Net Profit for Second Half of 2025

ST Engineering said it now expects to report a positive net profit for the second half of 2025, even after accounting for all one-off effects during the period, reinforcing earlier guidance that the group’s base operating performance remains strong and that it anticipates a positive net profit for the full year 2025. The updated outlook underscores the resilience of its diversified businesses in aerospace, smart city and defence-related activities, and may bolster investor confidence in the company’s earnings trajectory and its positioning as a major Singapore-listed industrial and technology player.

The most recent analyst rating on (SG:S63) stock is a Buy with a S$9.40 price target. To see the full list of analyst forecasts on ST Engineering stock, see the SG:S63 Stock Forecast page.