ST Engineering - OCBC Investment 2024-08-14: Well-positioned To Ride On Aerospace & Defense Capex Upcycle

• After delivering total returns of 21% compared to 5% by the Straits Times Index (STI) in 2023, ST Engineering share price continues to outperform the STI year-to-date with total returns of 12%.
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Healthy 1H24 results

• ST Engineering reported in-line 1H24 results, with revenue coming in at S$5.5b (50% of our expectations), while net profit of S$336.5m was 49% of our full year estimate. Revenue in 1H24 grew 13.5% y-o-y, while net profit grew 19.9% y-o-y.
  • Commercial Aerospace (CA) and Defence & Public Security (DPS) remain the drivers, growing 7% and 8% respectively in 1H24.
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Continues to secure new contracts

• In 1H24, ST Engineering secured new contracts of about S$6.1b, bringing the total order book to S$27.9b. S$4.9b of this is expected to be delivered in the remaining months of this year.
• ST Engineering declared a quarterly interim dividend of S$0.04/share, in line with our full year expectations of S$0.16/share for FY24.

Fair value estimate

• Read more at SGinvestors.io.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2024-08-14 SGinvestors.io

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