ST Engineering - RHB Invest 2023-11-30: Accumulate During Current Share Price Weakness

• The 7% correction in ST Engineering's share price since 12 Oct is an opportunity to accumulate ST Engineering – in our view, fundamentally, nothing has changed in terms of its outlook.
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• With 19% profit CAGR during 2022-2025F and defensive yields, we believe ST Engineering should be part of every investor’s portfolio.

Strong earnings growth outlook

• ST Engineering (SGX:S63)'s strong earnings growth outlook will continue to be supported by continued strength in commercial aerospace (CA) and sharp improvements in the urban solutions & satellite communications (USS) segments.
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  • The rightsizing exercise and earnings contribution from its TransCore acquisition should support earnings growth for USS.
  • The defence and public security (DPS) business should see earnings supported by the gradual delivery of the orderbook.
• For 2022-2025F, we expect ST Engineering's CA, USS, and DPS segments to deliver 18%, 63%, and 8% EBIT CAGR.

Debt situation should gradually improve.

• Read more at SGinvestors.io.

Shekhar Jaiswal RHB Securities Research | https://www.rhbgroup.com/ 2023-11-30 SGinvestors.io

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