ST Engineering - CGS-CIMB Research 2023-02-08: Tweaking Our Rate Assumptions

• We project ST Engineering (SGX:S63)'s 2H22F reported net profit at S$271m (-3% h-o-h, -1% y-o-y). Revenue is likely to be strong at S$4.7bn (+10% h-o-h, +17% y-o-y), driven largely by
  1. 6 months of contribution from TransCore, and
  2. - Read this at SGinvestors.io -
• However, we expect EPS growth to be weighed by higher interest expenses from ST Engineering’s short-term commercial paper (CP), which are most affected by rising interest rates.
• For Urban Solutions & Satcom (USS), integration and transaction costs continued to be incurred in 2H22. Satcom may take time to recover from higher cost of equipment due to long-lead time for purchases.
• See SGX Earnings Calendar – ST Engineering will report FY22 earnings on 24 Feb 2023.

Raising our FY23-24F interest rate assumptions further

• - Read this at SGinvestors.io -
• Our revised weighted average interest costs for FY23F are now at 3.5% (previously 2.9%).

China reopening is a bright spot for aerospace business

• Read more at SGinvestors.io.

LIM Siew Khee CGS-CIMB Research | Kenneth TAN CGS-CIMB Research | https://www.cgs-cimb.com 2023-02-08 SGinvestors.io

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