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ST Engineering reported 1Q revenue of S$3,257m, +11% y-o-y, or +15% on an adjusted basis. Robust growth across all operating segments contributed to the performance. Net profit growth outpaced top-line growth indicating expanding margins.
Growing order book; mid-teen revenue growth
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Impact from Middle East conflict is immaterial based on current assessment. We maintain estimates and our BUY rating on strong revenue visibility, execution and exposure to structural growth drivers.
Healthy top-line growth across business segments
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Revenue from defence and public security grew 7% y-o-y (13% excluding LeeBoy), led by all segments with good traction for international defence.
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Revenue from commercial aerospace grew 15% y-o-y, led by engine maintenance, repair and operations (MRO) and nacelle deliveries. ST Engineering continues to benefit from growth in LEAP engines for narrow-body aircraft and its status as the sole ‘Premier MRO Provider’ in Asia.
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Revenue from urban solutions and SATCOM grew +18%. Urban solutions continue to see strong contract wins with the segment contributing to a quarter of the current order book. SATCOM cost reduction is on track.
Contract wins in the quarter keep pace
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