ST Engineering has announced the divestment of its 51% stake in SPTel for $148m, a strategic move expected to close in the fourth quarter of 2025. This transaction will result in a one-off gain of approximately $83m, which the company plans to use for debt reduction and to slightly boost its earnings. The divestment aligns with ST Engineering’s strategy to focus on its core services, supported by a robust orderbook and increasing defence spending, according to an RHB research note.
The company’s decision to divest non-core assets is part of a broader strategy to streamline operations and enhance financial performance. The proceeds from the sale are anticipated to provide a modest uplift to earnings, whilst also contributing to debt reduction. Analyst Shekhar Jaiswal has reiterated a “BUY” recommendation for ST Engineering, with a new target price of SGD8.70, reflecting a 4% upside and a forecasted yield of approximately 2% for the financial year 2026.
ST Engineering’s strong orderbook, bolstered by structural tailwinds such as rising defence expenditure, ensures solid revenue visibility. Despite the divestment, the company’s long-term forecasts remain below its targets, indicating potential upside risks. The strategic focus on core services is expected to drive sustainable growth, positioning ST Engineering favourably in the market.
In summary, ST Engineering’s divestment of its stake in SPTel is a calculated move to optimise its asset portfolio and strengthen its financial position, with potential for future growth driven by its core business areas.
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