To The Moon

Recent Earnings (1H 2025) Summary

ST Engineering reported a strong performance for the first half of 2025, with significant growth across key financial metrics.

Revenue: The company's revenue increased by 7.2% year-on-year to S$5.9 billion. This was driven by healthy growth in its main business segments.

Net Profit: Net profit rose by nearly 20% year-on-year to S$402.8 million.

Segment Performance:

Defence & Public Security (DPS): This segment was a significant contributor, with revenue growing 12% year-on-year to S$2.65 billion. Growth was seen across all its sub-segments.

Commercial Aerospace (CA): This segment's revenue grew 5% to S$2.35 billion, with an 18% increase in operating profit, largely due to higher sales from engine maintenance, repair, and overhaul (MRO) services.

Urban Solutions & Satcom (USS): Revenue for this segment was flat year-on-year at S$921 million, though its operating profit saw an increase.

Order Book and Contracts: ST Engineering secured S9.1billioninnewcontractsinthefirsthalfoftheyear,withtheDPSsegmentreceivingthelargestshare(S4.2 billion). This has brought the company's total order book to a multi-year high of S$31.2 billion, providing strong visibility for future revenue.

Dividends: The company declared an interim dividend of S0.04pershareforthesecondquarterof2025,bringingthetotalforthefirsthalftoS0.08, which is unchanged from the previous year.

Potential Growth Drivers

ST Engineering's future growth is expected to be driven by a combination of a robust order book, favorable market trends, and strategic business initiatives.

Record Order Book: The massive S31.2billionorderbookprovidesaclearrunwayforsustainedrevenueandprofitgrowth.ThecompanyexpectstodeliverapproximatelyS5 billion from this backlog in the remainder of 2025.

Defence & Public Security: Global geopolitical tensions are driving an increase in defense spending, particularly in Europe. This trend is expected to boost demand for ST Engineering's defense products and services, including AI-enabled command and control systems and cybersecurity solutions. The company is actively expanding its international presence in this sector.

Commercial Aerospace: The continued recovery of the global air travel industry is increasing demand for aircraft maintenance, repair, and overhaul (MRO) services. ST Engineering is well-positioned to capitalize on this, with plans to expand its MRO capacity and invest in new technologies like predictive maintenance and sustainable aviation.

Strategic Investments and Portfolio Rationalization: The company is focusing on strengthening its core businesses while divesting non-core assets to recycle capital. Recent divestments, like that of LeeBoy and SPTel, are part of this strategy. The company is also making strategic investments to enhance its MRO capacities and international footprint.

Progressive Dividend Policy: In line with its optimistic outlook, ST Engineering has announced a new dividend policy for FY2026 onwards. It plans to pay out about one-third of any year-on-year increase in net profit as an incremental dividend, which could attract investors seeking consistent and growing returns. 

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