Date of Report: October 15, 2024
Broker: CGS International
Company Overview
ST Engineering (Singapore Technologies Engineering) is a Singapore-based multinational engineering company with a global presence. The company is involved in various sectors, including aerospace, electronics, land systems, and marine. It provides advanced technology, engineering, and smart city solutions to global markets.
Recent Contract Win in Qatar
ST Engineering has expanded its smart city initiatives by securing a S$60 million smart city contract in Qatar. Although the contract size is relatively small, it marks a significant step in growing the company’s presence in the Middle East, a region with substantial future potential for smart city solutions.
- Contract Value: S$60 million
- Project Focus: Smart city development in Qatar
- Growth Potential: Positive outlook for future contract wins in the Middle East
Business Outlook and Performance
For the upcoming business update scheduled for November 18, 2024, ST Engineering is expected to deliver solid financial performance, driven by consistent growth in its smart city and technology solutions segments.
- Projected 3Q24 Revenue: S$2.75 billion to S$2.79 billion
- Year-on-Year Growth: Expected 13-15% increase in revenue, aligning with consensus estimates
Investment Recommendation and Valuation
The brokerage firm maintains an “Add” rating for ST Engineering, highlighting its strong potential for further growth, particularly in the smart city sector. The target price (TP) remains unchanged based on a forward price-to-earnings (P/E) ratio for 2025.
- Rating: Add
- Target Price (TP): S$5.30
- Valuation Basis: 20x CY25F P/E (Calendar Year 2025 Forward Price/Earnings)
Conclusion
ST Engineering’s continued expansion in the smart city sector, particularly in the Middle East, coupled with its strong financial performance outlook, positions the company for further growth. With solid revenue growth projections and strategic contract wins, ST Engineering is expected to maintain its trajectory of success.
Report compiled by: CGS International, Malaysia
