Broker: CGS International
Date of Report: April 2, 2026

Excerpt from CGS International report.

Report Summary

• Stock: ST Engineering (STE SP)
• Action: Downgrade to Hold (from Add)
• Target Price: S\$11.05 (unchanged)
• Current Price: S\$11.10
• Key Idea: STE has secured S\$1.1bn worth of defence contracts in the Middle East year-to-date, reinforcing its regional presence. However, the stock is seen as fairly valued at 30x FY27F P/E, with much of its projected 16-17% two-year core EPS growth already priced in. Order conversion for international defence contracts is likely to be lumpy, and risks remain from potential delays in commercial aerospace MRO orders due to high jet fuel costs. Recommendation for investors is to take a breather on STE amid possible de-escalation of Middle East tensions and consider rotating into other industrial names with more attractive risk-reward. Upside risks include more defence contract wins and confirmation of iDirect divestment; downside risks are higher material costs and slower-than-expected order wins.

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