ST Engineering Sells 46.5% Stake in CityCab for S\$116.3 Million: What Retail Investors Need to Know

Key Highlights from the Divestment Announcement

• ST Engineering (SGX: S63) has divested its entire 46.5% stake in CityCab Pte Ltd to ComfortDelGro Corporation Limited for S\$116.3 million in cash.
• ComfortDelGro, which already held the remaining 53.5%, now owns 100% of CityCab, a major taxi operator in Singapore.
• The sale was completed on 1 September 2025, and the transaction was based on a “willing seller, willing buyer” agreement, with Deloitte & Touche Financial Advisory Services as the independent valuer.
• The agreed price represents a premium to the independent valuation of S\$98.9 million, translating to an attractive Enterprise Value/EBITDA multiple of 5.5x based on CityCab’s last 12 months’ unaudited EBITDA (as of 31 May 2025).
• The book value and net tangible asset value attributable to the stake was about S\$36.0 million as at 30 June 2025, making this a highly accretive divestment.
• ST Engineering expects a one-off gain of approximately S\$77.2 million from this deal in the current financial year.
• Proceeds will be used to pay down debt, delivering annualised interest expense savings of about S\$4 million.
• The divestment is classified as a non-disclosable transaction under SGX rules, but the company chose to announce it for transparency.

What This Means for Shareholders

• Significant One-Off Gain: The S\$77.2 million disposal gain is a substantial boost for ST Engineering’s bottom line this year. This could positively affect EPS and potentially support share price strength in the near term.
• Improved Balance Sheet: The cash inflow will be used to reduce debt, resulting in interest savings and strengthening the group’s financial position. This is especially relevant given the current higher interest rate environment.
• Strategic Focus: The sale aligns ST Engineering more closely with its core businesses, potentially paving the way for further capital recycling or reinvestment opportunities.
• Not a Recurring Event: Investors should note that this is a one-off gain. While positive, it will not recur in future years unless similar divestments take place.
• Potential for Share Price Movement: Given the size of the gain relative to the book value, this announcement could be price sensitive and may attract increased attention from both retail and institutional investors.

Deal Details and Valuation Insights

• The sale consideration of S\$116.3 million was determined after a joint independent valuation, which pegged the value of the 46.5% stake at S\$98.9 million as of 1 June 2025. The sale price thus represents a premium to this valuation.
• CityCab’s last 12 months’ unaudited EBITDA was used to calculate a 5.5x EV/EBITDA multiple for the transaction, which is generally regarded as a fair to attractive exit multiple for mature transportation assets.
• ST Engineering’s share of CityCab’s net profit for 2024 was S\$8.7 million, but the company did not consolidate CityCab’s revenue, as it was treated as an equity-accounted associate.

Context and Background

• ST Engineering has been invested in CityCab since its formation in 1995, originally through Singapore Technologies Automotive Ltd (which merged into ST Engineering in 1997).
• ComfortDelGro’s acquisition of the remaining stake consolidates its leadership in point-to-point transport, aligning with its core strategy in Singapore’s mobility sector.

Bottom Line for Investors

This is a significant, price-sensitive event for ST Engineering. The transaction not only unlocks value at a premium to book and independent valuation, but also delivers immediate financial benefits and positions the company for future strategic moves. Retail investors should monitor for further updates, including how management may deploy the stronger balance sheet and whether additional divestments or investments are forthcoming.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with qualified financial advisors before making any investment decisions.

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