Singapore Technologies Engineering Ltd (STE) has reported a steady performance for the first quarter of the financial year 2025, with revenue largely meeting expectations. The company’s defence sector led the way in segmental performance, contributing significantly to the overall results.
Despite this, DBS Group Research has downgraded STE to a “hold” rating, citing a balanced risk-reward scenario.
The company’s target price has been slightly increased to S$7.70, reflecting its stable growth. However, the potential for further upside appears limited. A notable achievement for STE is the record high order backlog of SGD29.8 billion, bolstered by healthy contract wins amounting to S$4.4b. This backlog underscores the company’s robust pipeline and future revenue potential.
Whilst tariffs are anticipated to have a minimal impact on near-term earnings, the situation could change if trade tensions escalate significantly. The company’s strategic positioning in the defence sector continues to be a key driver of its performance, yet the overall outlook remains cautious.
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