Broker Name: CGS International
Date of Report: January 26, 2026
Excerpt from CGS International report.
- ST Engineering (STE) secured a significant S\$1bn–S\$2bn contract from Singapore’s Ministry of Defence for its next-generation Terrex s5 Infantry Fighting Vehicles, boosting its order book to S\$32.6bn and supporting earnings visibility beyond 2028.
- Order wins for FY25F could reach a record S\$19bn–S\$20bn, driven by strong defence and commercial aerospace segments, with 2H25F core net profit expected to rise 12% half-on-half to S\$450m.
- Target price is raised to S\$10.20 (from S\$9.50), valuing STE at 30x FY27F P/E (3 standard deviations above its 17-year mean), reflecting a scarcity premium and confidence in more international platform wins.
- STE’s ESG profile is improving, with an LSEG ESG score of A-, a 25% cut in emissions since 2015, and increased use of renewables, supporting its premium valuation.
- Key risks include slower order wins; Temasek Holdings remains the largest shareholder at 50%.
Report Summary
- ST Engineering’s strong defence order win and robust order book underpin record earnings visibility and justify a higher valuation. The company’s positive ESG momentum and potential for international contracts add to its appeal, but order win momentum is a key risk.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgs-cimb.com
