- ST Engineering (SGX:S63)'s 1H22 net profit of S$279.9m (+2.0% h-o-h, -3.8% y-o-y) was broadly in line with expectations, accounting for 49% of the consensus’s full-year estimate. If we were to exclude one-off costs, mainly related to TransCore transaction and integration costs, net profit would have been up 4.0% y-o-y to S$307.0m.
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Absence of government grants support not felt.
- Business recovery and cost savings of S$104m, coupled with a one-off pension restructuring gain of S$72m in 1HFY22 more than offset the absence of the S$125m in government grants related to COVID-19-related support measures received by ST Engineering in 1H21.
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- The pension restructuring gain also occurred in an overseas subsidiary in the Commercial Aerospace division, but even without this impact, Commercial Aerospace margins were tracking above our estimates (core EBIT margin of around 8% compared to our expectations of around 6%). This helped offset the lack of growth momentum in Urban Solutions & Satcoms division performance in 1H22.
ST Engineering appears to be coping well with rising cost pressures.
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