Market UpdatesSingapore SGX stocks

ST Engineering Expands Smart City Presence with New Qatar Contract

Posted on October 15, 2024 at 8:45 am (GMT+8)

Date: October 15, 2024
Broker Name: CGS International

Company Overview

ST Engineering is a leading technology and engineering company based in Singapore, with a strong presence in various industries, including defense, aerospace, and smart city solutions. The company is recognized for its innovative technology solutions across global markets.

Recent Contract Win

ST Engineering has secured a S$60 million smart city contract in Qatar. While the size of the contract is relatively small, CGS International views this as a positive development, signaling the company’s growing presence and future potential for more significant contract wins in the Middle East region.

Financial Outlook

For the upcoming 3Q24 business update, ST Engineering’s revenue is forecasted to come in between S$2.75 billion and S$2.79 billion, reflecting a year-on-year growth of 13-15%. This aligns with market consensus figures, and CGS International maintains an optimistic view on the company’s revenue trajectory.

Investment Recommendation

CGS International reiterates an Add recommendation for ST Engineering, with a target price (TP) of S$5.30. The valuation is based on a 20x CY25F P/E, which reflects the company’s strong growth outlook, particularly in the smart city segment. This price target remains unchanged from prior analyses.

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Market UpdatesSingapore SGX stocks

text Download Copy code 1Okay, here’s an attempt to create an SEO title and answer potential user questions based on the provided document: 2 3SEO title: 4SEO title: SATS Ltd (SATS SP): Embedded Resilience & FY26F Outlook – CGS International Analysis 5 6Analysis based on the document: 7 8Based on the document provided, here’s a summary of key points and potential user questions with answers: 9 10Key Points: 11 12* Company: SATS Ltd (SATS SP) 13* Recommendation: Reiterate Add 14* Analyst: TAY Wee Kuang and LIM Siew Khee, CGS International 15* Key Themes: Embedded resilience, cargo market share gains, FY26F outlook 16* Target Price: S\$3.60 17* ESG: Rated B- by LSEG 18 19Potential User Questions & Answers: 20 21Q: What is the overall recommendation for SATS Ltd? 22A: CGS International reiterates an “Add” recommendation for SATS Ltd. [[1]] 23 24Q: What is the target price for SATS Ltd, and who set it? 25A: The target price is S\$3.60, set by CGS International. [[1]] 26 27Q: What is the basis for the target price? 28A: The target price is DCF-based (Discounted Cash Flow), with a WACC of 12.2%. [[1]] 29 30Q: What are the key factors driving the “Add” recommendation? 31A: The key factor is SATS’s growing market share in cargo handling, which is expected to support earnings growth in FY26F, even with potential global cargo demand weakness. [[1]] 32 33Q: What is SATS’s ESG rating? 34A: SATS has an ESG combined score of B- by LSEG. [[1, 5]] 35 36Q: What were SATS’s 4QFY3/25 financial results? 37A: SATS reported a 4QFY3/25 net profit of S\$38.7m (+18.3% yoy). Revenue was S\$1.48bn (+10.4% yoy). [[1]] 38 39Q: What are the potential risks to SATS’s performance? 40A: Downside risks include margin compression from weaker operating leverage due to softening cargo volumes and a decline in the aviation travel industry due to an economic downturn. [[1]] 41 42Q: What is the dividend payout? 43A: SATS declared a final DPS of 3.5 Scts, bringing FY25 total DPS to 5.0 Scts, representing a payout ratio of 30.6%. [[1]] 44 45Q: What is the earnings growth outlook? 46A: The report anticipates a 3-year earnings CAGR of 15.0%. [[1]] 47 48Q: Has the analyst revised earnings estimates? 49A: Yes, FY26F-27F EPS estimates have been increased by 7.9-8.5%. FY28F estimates are introduced. [[1]] 50 51Q: What are the catalysts for a potential re-rating? 52A: Potential re-rating catalysts include an expanded footprint for cargo operations supporting new contract wins and a faster step-up in utilization of its new central kitchens across China and India. [[1]] 53 54Q: What is SATS’s market capitalization? 55A: The market cap is US\$3,444m / S\$4,428m. [[1]] 56 57Q: Who are the major shareholders of SATS? 58A: Temasek Holdings is a major shareholder, holding 40.4%. [[1]] 59 60Q: What is SATS’s revenue in Mar-25A? 61A: SATS’s revenue in Mar-25A is S\$5,821 million. [[1]] 62 63Q: What are the peers of SATS? 64A: Airports of Thailand is a peer. [[4]] 65 66Q: What is the forecast dividend yield for Mar-26F? 67A: The forecast dividend yield for Mar-26F is 1.85%. [[1]]

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CGS International May 26, 2025 SATS Ltd: Embedded Resilience to Tide Through FY26F Key Takeaways from SATS Ltd’s 4QFY3/25 Performance SATS Ltd reported a 4QFY3/25 net profit of S\$38.7m, which is an 18.3% year-over-year...