Date of Report

October 3, 2024

Broker Name

CGS International

Company Overview

ST Engineering Ltd is a global technology, defense, and engineering group that leverages innovation to solve complex problems across various sectors, including aerospace, smart cities, defense, and public security.

Market Outlook

• Growth Potential: New foreign ammunition contracts and larger defense contracts are anticipated in the coming months.
• Operational Performance: The company’s defense operating profit margin (OPM) is expected to sustain at approximately 13%, indicating strong financial health.

Technical Analysis

• Recommendation: Maintain Add
• Target Price: S$5.30 (based on a price-to-earnings ratio of 20x for CY25F)

Industry Position

• MRO Tailwinds: The company is expected to benefit from Maintenance, Repair, and Overhaul (MRO) tailwinds, supported by positive commentary from peers such as AAR Corp and a slow pace of new aircraft deliveries.

Conclusion

ST Engineering is well-positioned for future growth, driven by potential new contracts and a favorable operational environment, reinforcing its status as a key player in the global defense and technology sectors.