ST Engineering 5 Year Investor Plan

ST Engineering 3Q2022 Updates

ST Engineering 5 Year Investor Plan

Yesterday, I received the interim dividend payout from ST Engineering in my bank account. In 3Q2022, ST Engineering has declared an interim dividend of 4.0 cents per ordinary share. It was then I realised that I have not been following up on news or performance of ST Engineering.

Currently, ST Engineering makes up 9.86% of my stock portfolio. Since my personal analysis of ST Engineering 7 years ago, the company now has organise itself into 3 business segments (Commercial Aerospace, Urban Solutions & Satcom (USS) and Urban Solutions & Satcom (USS)).

I have also got to know that ST Engineering has divested its U.S. Marine business on 14 November 2022.

Now, let us take a look at its 3Q2022 updates.

ST Engineering 3Q2022 Updates

In terms of revenue, all the business segments had performed well. The group achieved a 19% year on year (y-o-y) revenue increase.

$’m 9M2022 9M2021 Change
Commercial Aerospace 2,181 1,743 25%
Urban Solutions & Satcom (USS) 1,209 787 54%
Defence & Public Security 3,118 2,952 6%
Group Revenue 6,508 5,482 19%

Commercial Aerospace

As of September 2022, air travel recovery stood at 74% pre-COVID levels. International air travel lags at 70%, while domestic air travel growth leads at 81%.

ST Engineering Air Travel Recovery

In 3Q2022, the commercial aerospace segment had new contract wins of $1.0b, totalling $3.0b for 9M2022.

Urban Solutions & Satcom

I wanted to show you the above picture from my past post on ST Engineering. It shows that the company has foresight to invest in Smart City.

This business segment has a 54% y-oy revenue increase, attributed to the contribution from TransCore.

If you never heard of TransCore, the company is a wholly-owned subsidiary of ST Engineering, a global technology, defence, and engineering group with a diverse portfolio of businesses across the aerospace, smart city, defence, and public security segments.

In this segment, Urban Solutions & Satcom segment had a new contract wins of $2.0b in 3Q2022, totalling $2.7b for 9M2022. Part of it is a $1.4b Turnkey rail contract for Kaohsiung MRT Yellow Line.

Investors should bear in mind that the global chip shortages continue to
impact this segment.

Defence and Public Security

The Defence and Public Security segment achieved a 6% y-o-y revenue increase. This segment achieved a new contract wins of $1.8b in 3Q2022,
totalling $4.5b for 9M2022. They had a significant international defence
contract wins (more than $300m) in the Middle East.

ST Engineering seems to have a revenue target they has set forth in the year 2026 which you can see below.

ST Engineering Digital Business Revenue Target

Summary ST Engineering 3Q2022 Updates

As of 30th September 2022, ST Engineering had a robust order book of $25.0b. $2.5b expected to be delivered in 4Q2022.

With all the positives surrounding ST Engineering, I believe this company will surely perform well.

Since we are near the end of the year, let us look at the 1 year price chart of ST Engineering. You can see that the market had punished ST Engineering despite its excellent performance.

At the current share price of S$3.36 and FY21 full year dividend payout of 15 cents, this translate to a current dividend yield of 4.46%. I will say this current dividend yield is decent. ST Engineering also has a constant track record of paying dividends of 15 cents yearly.

ST Engineering Share Price 21 December 2022

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