ST Engineering (SGX:S63)'s 1Q24 revenue update was within our expectations at 25% of our FY24e. Revenue grew an impressive 18% y-o-y to S$2.7bn.
Around 2/3 of the growth was from commercial aerospace revenue that jumped 32% y-o-y to S$1.1bn. Rising aircraft flying hours, slower introduction of new engines, and increased capacity boosted revenue in aircraft MRO.
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Satellite operations is still looking to transition customers to its multi-orbit next-gen platform.
We expect revenue momentum and operating leverage to build up in the remaining quarters. We nudge our FY24e earnings forecast for ST Engineering by 3% to S$713mil.
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The Positives
Aircraft MRO remains the growth driver.
Commercial aerospace (CA) registered a 32% y-o-y jump in 1Q24 revenue to S$1.2bn. Growth was broad-based and led by aircraft MRO (Maintenance, Repair, and Overhaul).
With longer flying hours, MRO work is rising on engines, airframes, and other components. Delays in aircraft deliveries will further push the lifecycle of the existing aircraft fleet.
Broad-based growth in defence and public security.
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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/.
