- ST Engineering has set high single-digit top line and low-to-mid teen bottom line growth targets for the next five years.
- We raise our DCF-based ST Engineering's target price to S$7.1 on higher operating cash flows and lower WACC. Retain BUY on earnings visibility, steady execution and favourable thematic.
- - Read this at SGinvestors.io -
Investor Day Takeaways
- Defense, digital businesses and smart city projects will anchor growth. Efficiency improvement will lead to improved bottom lines.
- From 2026 onwards, ST Engineering will pay out a third of earnings growth as incremental dividends. Surplus cash will be reinvested or used to enhance balance sheet flexibility.
High single-digit revenue growth
- - Read this at SGinvestors.io -
- Individual business segments of CA, DPS and USS are expected to grow at ~ 6%, 9% and 12%, respectively.
- Digital business, spanning across DPS and USS, is expected to grow the fastest at 17% albeit from a low base. The growth drivers are broadly unchanged with focus on growing international market share and capturing synergies by cross-selling and implementing reusable/dual-use technology modules esp. for smart city projects.
- The above targets imply broad-based growth normalisation though M&As helped in prior years.
Focus on productivity, capital efficiency
- Read more at SGinvestors.io.
