Skip to main content

My Personal Analysis of ST Engineering

stee_logo

ST Engineering is a Singapore company specializing in Aerospace, Electronics, Land Systems and Marine sectors.

Market Capitalization

As of 2nd March 2015, the number of shares stands at 3,108,513,160. The closing share price is S$3.47.
ST Engineering is obviously a large cap stock.

Dividends

ST Engineering pays stable yearly dividends. From the table below, you can see that even during the year of recession (2008 Global Financial Crisis), ST Engineering still manages to maintain and pay out a dividend of 15.80 cents. The dividend payout ratio is also healthy and sustainable, well maintained below 100% (except for 2006).

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total dividend (cents) 13.6 15.11 16.88 15.80 13.28 14.55 15.50 16.80 15.0 15.0
Earnings per share (cents) 14 15 17 16 15 16 17 19 19 17
Dividend payout ratio (%) 97% 101% 99% 99% 89% 91% 91% 88% 79% 88%

Debt

The debt servicing ratio is healthy and decreased from a high of 14.8% in year 2010 to 8.1% in year 2014 over the 5 year period.
Year 2010 2011 2012 2013 2014
Net interest expense (SGD dollar in million) 87 64 50 78 45
Operating Income (SGD dollar in million) 587 608 658 673 555
Debt service ratio (%) 14.8% 10.5% 7.6% 11.6% 8.1%

Investment Moats

Strong Global Presence

ST Engineering has a strong global presence. They have offices in Americas, Europe, Africa/Middle East and Asia Pacific.

High Switching Cost

If you are aware, most of MINDEF weapons and defence systems are mostly innovated and developed by ST Electronics (Info-Comm Systems). One good example is the SAR 21 rifle that we use in the Singapore Army. Unlikely Singapore Army will replace all SAR 21 rifles with other weapons in the short term.

Patents

Below are patents by ST Electronics (Satcom & Sensor Systems).

a) Digital Communication System and Method
Awarded the certificate of grant of patent for our invention relating to a digital communication system and method that sends and receives data to and from stations in a satellite communication system, digital radio and cellular telephony.

b) Portable Satellite Terminal
The invention relates to a portable satellite terminal for satellite communication that is able to send and receive data to and from stations in a satellite communications system. The system can be operated by one person and can be mounted on a vehicle, vessel or building.

c) Motion Detector
Awarded the certificate of grant of patent for our invention, generally relating to the field of the motion detectors, and in particular, to a motion detector which can efficiently and cost-effectively suppress harmonic frequencies emanating from the motion detector.d) Combined Motion Detection and Shock Sensing Apparatus
We were also awarded the patent for the invention relating generally to the field of motion detection and shock sensing devices, and in particular, to a motion detector which can also detect shock or vibration.

 Government Support

ST Engineering has strong government support. The following is extracted from ST Engineering website “ST Electronic’s Large-Scale Systems Group (LSG™) is a leading electronic system provider that serves customers in the areas of transportation, intelligent building and defence. Established in 1969, the group was set up to provide repair and maintenance services to the Ministry Of Defence, Singapore.

 Investment Strategy

I am currently vested in ST Engineering for long term stable dividend income.
Given the recent price weakness due to Greek debt crisis and reports of weak Q2 GDP Growth, I will grab the chance to top up my holdings.
 “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” – Warren Buffett

4 thoughts on “My Personal Analysis of ST Engineering

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to My Sweet Retirement via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.