ST Engineering - OCBC Investment 2023-02-28: Good Revenue Visibility

• ST Engineering's FY22 earnings within expectations.
• Continues to secure contracts; robust order book of S$23b.
• Consistent dividends over the years with recent increase to S$0.16/share per annum.

Net profit 6% lower y-o-y, but would have been higher on a base operating performance (BOP) basis if certain items were excluded

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• Net profit attributable to shareholders was 6% lower at S$535m for the year, but this would have been 39% higher at S$549m on a BOP basis if items such as government support, energy inflation, and TransCore T&I expenses were excluded.
• Results were generally within expectations.

ST Engineering – Segmental updates

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• Urban Solutions and Satcom (20% of total revenue) registered a 49% growth in revenue with the competition of the TransCore acquisition in March 2022, while EBIT was 13% higher.
• Defence & Public Security (47% of total revenue) saw a 6% rise in revenue but EBIT was down 13% in the absence of S$51m government support received in the prior year and a S$23m impact from energy inflation. If these factors were excluded, EBIT from this segment would be stronger by 3% y-o-y.

Continues to secure new contracts

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OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2023-02-28 SGinvestors.io

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