- ST Engineering (SGX:S63)'s 9M23 revenue of S$7.3b (+12% y-o-y, 9% q-o-q) met our/consensus estimates, at 76% of respective FY23 forecasts. The increase was driven by all business segments.
- Having surpassed pre-pandemic revenue levels, we think that commercial aerospace is well positioned to capitalise on the last leg of recovery, with its strategic hanger capacity expansion supporting higher MRO (Maintenance and Repair Overhaul) demand and TransCore acquisition expected to be earnings accretive, leading to a positive EBIT for the USS division.
Topline growth in all segments
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- Urban Solution & Satcom (USS) posted solid revenue of S$1.3b (+13% y-o-y) in 9M23, contributed by TransCore and higher contract wins (S$0.3b), offset by Satcom’s weaker performance amid global supply chain disruption. FY23 EBIT for this segment is expected to be lower at S$27m as compared to FY22 (S$29m) due to ongoing challenges amid weaker demand sentiments delaying customer spending.
- Defence & Public Security (DPS) revenue rose 6% y-o-y, excluding recently divested US marine, on higher 9M23 contract wins of US$250m.
Positive catalysts to reach new heights
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