UOB Kay Hian Research has maintained its “hold” rating on Singapore Technologies Engineering (ST Engineering), following the company’s announcement of a 19.7% year-on-year increase in net profit for the first half of 2025. The net profit reached $403m, aligning with UOB Kay Hian’s expectations and representing 49.5% of the full-year forecast. The company’s revenue for the period was $5.92b, slightly behind projections but expected to catch up in the second half of the year.
ST Engineering, a global technology, defence, and engineering group, reported that its defence and public security (DPS) segment outperformed expectations with an 11.7% increase in revenue, supported by growth across all subsegments. The commercial aerospace (CA) segment also showed resilience, with a 5.2% revenue increase, despite challenges from the US-China tariff war. However, the urban solutions and satcom (USS) segment underperformed, with revenue growth of only 0.3%.
The company’s orderbook reached a record high of $31.2b by the end of the second quarter, with significant contract wins across its business segments. Management remains optimistic about the company’s growth prospects, maintaining its five-year targets, including an 8.6% revenue compound annual growth rate (CAGR) from 2025 to 2029.
ST Engineering plans to use proceeds from the disposal of Leeboy and SPTel shares to reduce debt further, with net gearing expected to decrease. The company has also maintained its quarterly dividend of 4 Singapore cents, translating to a 2.1% dividend yield for 2025. UOB Kay Hian has raised its target price for ST Engineering to $8.56, citing the company’s strong orderbook and growth potential.
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