ST Engineering (SGX:S63)'s FY23 net profit was in line with our expectations. Net profit was affected by several one-offs amounting to S$66mil. Excluding these, net profit would have grown by 23.7%.
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Commercial aerospace (CA) grew 47% y-o-y (excluding one-off items) with increased MRO demand and improved margins from passenger-to-freighter conversions.
Urban solutions and Satcom (USS) incurred loss on divestment and severance costs on restructuring. Transcore turned profitable in 4Q23.
Orderbook remained strong at S$27.4bn.
The Positives
Aerospace MRO revenue rose 41%, as demand surged in tandem with recovery in air travel.
The passenger-to-freighter conversion business has also scaled the learning curve and is turning profitable. However, commercial aerospace FY23 EBIT margin fell 1.5% pt to 8.6% due to higher manpower costs.
Defence and public security posted EBIT growth of 40%.
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Net debt to EBITDA improved to 4.2x, from 5.0x in Dec 22
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Above is an excerpt from a report by Phillip Securities Research. Clients of Phillip Capital may be the first to access the full PDF report @ https://www.stocksbnb.com/.
