Date of Report
October 3, 2024
Broker Name
CGS International Securities
Company Overview
Singapore Technologies Engineering Ltd (ST Engineering) is a global technology, defence, and engineering group. The company leverages technology and innovation to address challenges and improve lives through its diverse portfolio, which spans across aerospace, smart city solutions, defence, and public security segments. ST Engineering serves clients worldwide, maintaining a strong presence in key global markets.
Recent Performance and Technical Snapshot
ST Engineering has demonstrated a strong bullish trend, with its share price reaching key target points. In the previous call dated August 26, 2024, the stock hit its first target price of S$4.79. The price action remains positive, supported by various technical indicators pointing towards a sustained upward trajectory.
Key technical aspects observed:
- The stock has maintained its position within the uptrend channel over the past two years.
- A secondary uptrend line has been robust for the last eight months.
- It recently broke above the pennant formation, indicating a continuation of the bullish trend.
- Prices are trending above all the Ichimoku indicators, signifying further strength.
- MACD/Signal lines remain positive above the zero line, with a steady histogram.
- The stochastic oscillator remains above the 80-line, suggesting sustained momentum.
- Volume trends have shown healthy expansion, further supporting the bullish outlook.
Support and Resistance Levels
- Entry Price(s): S$4.69, S$4.57, S$4.36
- Support 1: S$4.59
- Support 2: S$4.36
- Stop Loss: S$4.22
- Resistance 1: S$4.79
- Resistance 2: S$5.50
Target Prices
- Target 1: S$4.90
- Target 2: S$5.06
- Target 3: S$5.26
- Target 4: S$5.50
Growth Prospects
ST Engineering is well-positioned to benefit from new foreign ammunition contracts and larger defence contracts expected in the coming months. The company’s defence operations profit margin (OPM) is projected to maintain around 13%, adding stability to its future earnings. Additionally, tailwinds in the Maintenance, Repair, and Overhaul (MRO) business, supported by peers like AAR Corp and the ongoing slow pace of new aircraft deliveries, offer further growth opportunities.
The company is also seen as a beneficiary of potential interest rate cuts, which could provide healthy earnings tailwinds, reinforcing its financial stability and growth prospects in the near term.
Conclusion
ST Engineering’s combination of technical strength, robust market positioning, and favorable growth prospects, especially in its defence and aerospace sectors, makes it an attractive investment. The ongoing bullish trend is supported by key technical and fundamental factors, with the stock well-positioned to benefit from macroeconomic tailwinds, particularly interest rate cuts.
