Singapore Technologies Engineering: A Buy On Higher Valuation Multiple And Growth

2025-01-28 17:51:39 ET

Summary

• Singapore Technologies Engineering Ltd stock is a buy with a price target raised to $38.71, driven by a higher EV/EBITDA multiple and strong long-term value.
• The company reported 14% revenue growth in Q3, with significant contributions from the defense and commercial aerospace segments.
• Risks include part shortages and satcom challenges, but opportunities lie in MRO demand, e-commerce-driven freighter conversions, and defense sector growth.
• Despite currency impacts, SGGTK's balanced order book and robust backlog support continued positive performance and investment appeal.

I covered Singapore Technologies Engineering Ltd aka ST Engineering (SGGTK) in September 2024 with a buy rating. Since then, the stock has appreciated by 6.4%, seemingly underperforming the 10% return of the S&P 500 (SP500). However, looking at the STEG.SI ticker on the Singapore Stock Exchange which provides higher volumes, we observed that in Singaporean dollars, the stock appreciated by 10.5% which is in line with the performance of S&P 500 and in fact slightly better. If we then also implement currency fluctuations, we are left with a positive return of nearly 6.3%. So, ST Engineering stock performance was a bit lower due to changes in the currency rates....

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