- ST Engineering reported 1H25 PATMI of S$403m, +10% h-o-h/+20% y-o-y, with annualised run-rate 4% below MIBG’s FY25E. Key items were in line with expectation with top line growing 7% y-o-y while cost savings and better margin mix improved bottom-line growth.
Inline 1H25, stretched multiples.
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- Downgrade to HOLD on a slightly higher SOTP-based ST Engineering's target price of S$8.40 on lower debt cost.
Robust operations; limited tariff impact so far,
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- Group EBIT grew 15% on back of better product margin mix and cost savings. EBIT margin rose to 10.2% vs 9.5% in 1H last year (though was similar if adjusted for other income in 1H this year). Further, with 4% lower finance expense, PATMI rose 20%.
- Group gross debt was lower at S$5.5b (vs. S$6.1b in June 2024) and debt to EBITDA contracted to 3.2x (4.0x in June 2024). Management noted S$34m deferred revenue for engine MRO business in China over 2.5 months in 2Q versus prior guide of less than S$40m per month.
Record order book; focus on portfolio rationalisation,
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