SG Movers for Wednesday: ST Engineering's Strong Performance Drives Stock Price Gain

ST Engineering, a Singapore-based engineering company, emerged as the top gainer on Wednesday, with its stock price surging following a robust first-half (1H) 2023 financial performance. The company's strong revenue growth, record order book, and strategic positioning in growth sectors have contributed to its stock price increase, making it a compelling investment opportunity for investors seeking undervalued opportunities with strong growth potential and solid fundamentals.


ST Engineering's 1H2023 financial results demonstrated the company's resilience and growth prospects. The company reported a 14% year-on-year (y-o-y) increase in group revenue, driven by higher contributions from all its three business segments – Commercial Aerospace, Defence & Public Security, and Urban Solutions & Satcom. EBITDA and EBIT also grew by 16% and 15% respectively, indicating strong operational efficiency.


The Commercial Aerospace segment rebounded robustly to its pre-COVID level, with revenue growing strongly by 32% y-o-y. Despite a one-off pension restructuring gain in 1H2022, the company's adjusted net profit on a base operating performance basis increased by 26% y-o-y. The Defence & Public Security segment remained resilient, with revenue increasing 6% y-o-y (excluding the divestment of U.S. Marine) and EBIT rising 41% y-o-y.

ST Engineering's record order book of $27.7b, with about $4.4b expected to be delivered in the remaining months of 2023, further boosted investor confidence. The company secured new contracts worth $9.5b in 1H2023, demonstrating its strong pipeline of projects and commitment to driving growth. This strategic focus on growth sectors, coupled with effective management and diversification across business segments, has positioned ST Engineering to deliver value creation for stakeholders.


ST Engineering's management has effectively addressed challenges, such as the Satcom sub-segment's restructuring, by implementing decisive steps to transform the business. This proactive approach, coupled with a strong performance in other segments, has instilled investor confidence in the company's future prospects.

Analysts have also recognized ST Engineering's potential, with an average target price of $4.15, indicating a potential upside of 15% from its current share price. This positive outlook is supported by the company's strong 1H2023 performance, record order book, and robust growth in its Commercial Aerospace segment.

In conclusion, ST Engineering's strong financial performance, strategic positioning in growth sectors, and effective management have contributed to its stock price gain. The company's resilience, diversification, and commitment to driving growth make it an attractive investment opportunity for investors seeking undervalued opportunities with strong growth potential and solid fundamentals.