ST Engineering 1H2025 Results: Robust Growth and Strategic Realignment

ST Engineering delivered a strong set of results for the first half of 2025, marked by profit growth outpacing revenue gains, robust order book expansion, and ongoing portfolio rationalization. Below, we break down the key financial metrics, segment performance, dividends, and management outlook, followed by actionable recommendations for investors.

Key Financial Metrics

*2H2024 and HoH (half-on-half) figures are inferred by subtracting 1H2024 data from full-year 2024 data where available, or annualizing 1H2024; interim dividend policy appears consistent.

Segment Performance and Trends

• Commercial Aerospace: Revenue up 5% YoY to \$2,347m, with EBIT surging 18% thanks to robust Engine MRO and cost savings. Aircraft sales and FX effects were net positive.
• Defence & Public Security: Revenue rose 12% YoY to \$2,648m, and EBIT climbed 13%, benefiting from broad-based demand across sub-segments (land, marine, defence aerospace, digital and cyber).
• Urban Solutions & Satcom: Revenue was stable at \$921m (+0.3%), while EBIT saw a 32% leap due to better margins and cost controls. Satcom revenue declined, but Urban Solutions offset the drop.

Order Book and Contract Wins

• Order Book: Reached a record \$31.2b as at 30 June 2025, up from \$27.4b at the end of 2024. This provides strong revenue visibility.
• Contract Wins: \$9.1b in 1H2025, with \$4.7b in 2Q2025 alone. Wins are well-diversified across commercial aerospace, defence, urban solutions, and satcom.

Portfolio Management and Divestments

ST Engineering is executing on its portfolio rationalization strategy:

• Divestments: Announced sale of LeeBoy and SPTel, expected to yield ~\$450m in net cash proceeds and a one-off gain of ~\$180m. Proceeds will be used to repay borrowings or reinvest, saving ~\$15m in annual interest expense.
• Debt Reduction: Total borrowings reduced from \$6.5b (Dec 2022) to \$5.5b (Jun 2025). Gross Debt/LTM EBITDA improved to 3.2x (from 5.2x in 2022). Interest rates are mostly fixed (71% fixed:29% floating).

Exceptional Items and One-Offs

• Limited direct impact from tariffs, with a deferred Engine MRO China revenue of \$34m over 2.5 months but described as lower than previously expected and financially immaterial.
• No mention of asset revaluations, legal disputes, or significant related-party transactions.

Chairman’s Statement and Management Tone

“We delivered a robust set of results in first-half 2025. In executing our growth strategy, we continue to be agile in navigating the evolving global landscape. Our recent divestments are in line with our portfolio rationalisation strategy to exit non-core business and recycle capital. We remain steadfast in strengthening our core businesses. Our strong order book continues to provide revenue visibility for the Group.”

— Vincent Chong, Group President & CEO

The tone is positive, emphasizing growth, resilience, and proactive portfolio management.

Dividends

• 1Q2025 and 2Q2025 interim dividends maintained at 4.0 cents per share each, totaling 8.0 cents for 1H2025, in line with the prior year’s interim payout.

Outlook and Forecasted Events

• The strong order book provides revenue visibility for the rest of the year.
• Management notes continued macroeconomic risks (inflation, supply chain, tariffs) but expects the diversified portfolio to offer resilience.
• Portfolio rationalization will continue, with proceeds from divestments strengthening the balance sheet.

Conclusion and Investment Recommendations

Overall, ST Engineering’s 1H2025 performance appears strong. The group delivered solid revenue and profit growth, maintained a high dividend, and bolstered its balance sheet with strategic divestments. The record order book and cost discipline provide confidence in future earnings, while management remains alert to macro risks.

• For existing shareholders: Consider holding the stock, given the company’s strong execution, stable dividends, and positive outlook. The ongoing portfolio rationalisation and strong cash flow may drive further value.
• For potential investors: The current financials and management commentary suggest ST Engineering offers a compelling investment case for those seeking exposure to diversified engineering, defence, and urban solutions. Prospective investors may find this an attractive entry point, especially if macroeconomic headwinds moderate.

Disclaimer: This analysis is based solely on the company’s reported 1H2025 financials and does not constitute investment advice. Investors should consider their individual financial objectives and risks, and may wish to consult a financial adviser before making any investment decisions.

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