ST Engineering - CGS-CIMB Research 2022-11-16: Heading Out To The Highway

ST Engineering - Heading Out To The Highway

  • ST Engineering (SGX:S63)’s wholly owned subsidiary TransCore has been awarded US$1.07bn (S$1.47bn) in turnkey tolling system contracts in the US. See ST Engineering's announcement dated 15 Nov 2022.
    • The first contract is US$941m (S$1.25bn) with the New Jersey Turnpike Authority (NJTA), which includes the design, installation, operation, and maintenance of tolling systems on the 241km Garden State Parkway and 209km New Jersey Turnpike, two of the busiest toll roads in the US for 10 years.
    • The second contract is US$159.3m (S$218.2m) with the South Jersey Transportation Authority (SJTA) which covers the design, installation, operation, and maintenance of an All-Electronic Tolling (AET) system on the 72km Atlantic City Expressway for 12 years.
  • With the new contracts, ST Engineering’s order book currently stands at a record high of S$24.6bn. Assuming a 30% project implementation phase, we estimate the contracts will add ~ S$110m p.a. in revenue to ST Engineering over the next 3-4 years, and thereafter S$120m p.a. till 2032-2034F.
  • We view the order wins positively as they demonstrate confidence in TransCore’s tolling solutions from authoritative bodies. We are also positive on TransCore’s future order momentum, given
    1. its leading market share in the US electronic toll collection (ETC) industry,
    2. the recovery in domestic traffic volumes, and
    3. further scope for the rollout of ETC solutions in the US given the current reliance on manned booths.
  • In addition, the potential rollout of congestion pricing solutions in New York City in 2023 could spur further contract wins, given TransCore’s expertise in this field.
  • We reiterate our ADD call on ST Engineering at an unchanged target price of S$3.99, still based on blended valuations (20x CY23F EPS, DCF, 4% dividend yield).

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LIM Siew Khee CGS-CIMB Research | Kenneth TAN CGS-CIMB Research | 2022-11-16
SGX Stock Analyst Report ADD MAINTAIN ADD 3.99 SAME 3.99

Previous report by CGS-CIMB:
2022-11-07 ST Engineering - Divesting Loss-Making US Marine Business

Target prices by 2 other brokers at ST Engineering Target Prices.
Listing of broker reports at ST Engineering Analyst Report.

Relevant links:
ST Engineering Share Price History,
ST Engineering Announcements,
ST Engineering Dividends & Corp Actions,
ST Engineering News Articles


SGX Stock / REIT Search


Trust Bank Referral Code