Market Analysis and Company Insights – March 2025

Broker: Lim & Tan Securities

Date: 03 March 2025

Overview of Financial Markets

The FSSTI Index closed at 3,895.7, reflecting a decline of 0.7% for the day, while year-to-date, it has shown a positive growth of 2.9%. In contrast, the INDU Index and SPX Index rebounded, closing at 43,840.9 and 5,954.5 respectively, with increases of 1.4% and 1.6% on the same day. The volatile nature of the markets is mirrored in various sectors, with commodities like Gold and Crude Oil showing mixed results.

ST Engineering – A Robust Performer

ST Engineering’s shares have seen a positive increase, closing at \$5.41, with a notable rise of 16 cents. The company reported a year-end revenue of \$11.28 billion, achieving a year-on-year increase of 12% from \$10.1 billion. The group’s EBIT reached a new high of \$1.08 billion, reflecting an 18% rise y-o-y from \$915 million. The PBT was reported at \$863 million, showcasing a significant 23% increase from \$704 million, while the net profit grew by 20% to \$702 million from \$586 million.

Segment-wise, the Commercial Aerospace division posted a revenue of \$4.38 billion, marking a 12% rise from the previous year, with a segment EBIT growth of 19%. The Defence & Public Security sector also performed well, with revenues reaching \$4.94 billion, up 16% y-o-y. The Urban Solutions & Satcom segment showed improvement, achieving \$1.96 billion in revenue.

The company reported a robust order book totaling \$28.5 billion, with expectations to deliver approximately \$8.8 billion from this in 2025. The board proposed a final dividend of 5.0 cents per ordinary share, leading to a total dividend of 17.0 cents for FY2024, an increase from the previous year’s 16.0 cents. Analysts maintain an “Accumulate on Weakness” rating on ST Engineering, with a target price of \$5.74, indicating a 6.1% upside potential.

InnoTek Limited – Strategic Growth in a Competitive Market

InnoTek Limited demonstrated resilience with a stock price of S\$0.43, up 0.5 cents. The company declared a first and final dividend of 2.0 Singapore cents per share, marking its ninth consecutive year of profitability with a net profit of S\$5.5 million and a revenue increase to S\$238 million for FY2024.

The company faced S\$6.0 million in one-off non-cash exceptional items, bringing net profit to S\$11.8 million when adjusted. Revenue growth was driven by strong sales in the Office Automation and TV/Display segments, despite a decline in the GPU server and gaming machine sectors. The Automotive segment saw increased demand for electric vehicle components, offsetting traditional petrol car component sales.

InnoTek’s gross profit for FY2024 rose by 10.6% to S\$36.4 million. The outlook remains positive, particularly for GPU servers and the Automotive segment, as the company is strategically aligning its customer base and product offerings. The recommendation for InnoTek is to “Accumulate,” reflecting confidence in its growth trajectory and resilience in a competitive landscape.

Other Notable Companies

Frasers Logistics Trust

Closing at 7.66, Frasers Logistics Trust continues to attract investor interest due to its stable yield.

Mapletree Industrial Trust

With a closing price of 6.97, Mapletree Industrial Trust remains a solid investment choice within the REIT sector.

DBS Bank

DBS Bank, closing at 6.64, shows resilience and profitability amid economic fluctuations.

Wilmar International

At 9.63, Wilmar International continues to dominate the agricultural sector with robust market performances.

Investment Recommendations and Conclusion

Overall, the market exhibits mixed signals, yet companies like ST Engineering and InnoTek are highlighted as strong performers with solid growth potential. The recommendations to “Accumulate” on both ST Engineering and InnoTek reflect confidence in their fundamentals and growth strategies despite market volatility.