Broker Name: CGS International
Date of Report: February 27, 2026
Excerpt from CGS International report.
Report Summary
- ST Engineering (STE) is set to benefit from a global push towards self-sufficiency in defence, with an identified addressable market above US\$11bn for international defence and strong order visibility backed by a record S\$33.2bn backlog.
- FY25 core net profit of S\$851m was in line with expectations, and STE’s FY25 order wins reached S\$18.7bn, with Defence & Public Security (DPS) accounting for 48% of wins; STE is targeting at least S\$1.2bn in international defence orders for FY26F.
- Commercial Aerospace hangar utilisation was full in FY25, with expansion in Singapore, the US, and China expected to boost long-term growth; demand is strong due to a global aircraft delivery backlog.
- STE is reiterating an “Add” rating, raising the target price to S\$11.05, supported by robust backlog growth (~15% p.a.) and a projected 3-year EPS CAGR of ~14%.
- Peer comparison shows STE trades in line with global counterparts, with key risks being peak government spending and global economic slowdown.
- STE’s ESG profile has improved, now rated A- by LSEG, with significant emissions and water consumption reductions and a focus on smart city and defence/security solutions.
- Financial highlights include revenue of S\$12.3bn for FY25, forecasted to grow to S\$15.3bn by FY28, and net profit rebound from S\$463m in FY25 to S\$1,273m by FY28.
- The company is backed by major shareholders such as Temasek Holdings (50%), and continues to expand internationally, particularly in military shipbuilding and vehicle platforms.
- STE’s transformation and operational improvements, including cost savings from restructuring, are expected to drive margin and earnings growth going forward.
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
