- ST Engineering (SGX:S63)'s 1H24 results were within expectations. 1H24 revenue and PATMI were 50%/47% respectively of our FY24e estimates. Adjusted PATMI rose 12% y-o-y to S$337mil. Of the eight major divisions, seven registered revenue growth, except for Satcom.
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- We increased our margin assumption from greater operating leverage in commercial aerospace and higher product sales in defence. We raised our FY24e earnings forecast for ST Engineering by 4% to S$743mil.
The Positive
Commercial Aerospace (CA) robust revenue growth.
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- Margins for MRO were impacted by supply chain and spare parts availability, which raised repair turn times.
- The mid-single-digit margin on the passenger-to-freight conversion (PTF) was another drag on earnings.
The Negative
Satcom weakness.
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