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ST Engineering - OCBC Investment 2021-02-19: A Year Like Any Other In Terms Of Dividends

SINGAPORE TECH ENGINEERING LTD (SGX:S63) | SGinvestors.io SINGAPORE TECH ENGINEERING LTD (SGX:S63)

ST Engineering - A Year Like Any Other In Terms Of Dividends

  • ST Engineering's 2020 net profit lower by 10%.
  • S$350m of government support in 2020; lower going forward.
  • Dividend remains consistent at S$0.15 for 2020.



ST Engineering reported healthy set of results, as expected.

  • ST Engineering (SGX:S63) reported a commendable set of results amidst a tough environment – FY20 revenue was down 9% to S$7.2b while net profit was lower by 10% at S$521.8m compared to a year ago. See ST Engineering's announcements. Reported net profit was about 4% higher than our FY20 net profit forecast of S$501m.


Aerospace boosted by govt support

  • Aerospace revenue was 21% lower y-o-y at S$2.7b, and net profit was 28% lower y-o-y at S$192.9m. This was mainly due to lower volume of MRO activities, asset impairments, and absence of favourable impact of end-of-programme reviews, offset by savings from cost reduction measures and government support.
  • Excluding government support, ST Engineering's FY20 net profit for Aerospace would still have been positive.


Steady top-line performance for Electronics and Land systems

  • For Electronics, revenue was lower by 2% at S$2.3b, while net profit grew 11% to S$203.9m. In Land Systems, revenue was S$1.4b, comparable to the previous year. Net profit was 31% higher at S$101.4m. Both divisions’ bottom-line were largely helped by cost reduction measures and government support.
  • As for Marine, revenue was 10% higher at S$710m but net profit was down 45% to S$28m with weaker US shipbuilding performance, and higher costs due to COVID-19 disruption on operations and workforce. As before, the defense and commercial split for total group sales was about 35%/65% respectively.

Lower government support going into 2021






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-02-19
SGX Stock Analyst Report BUY MAINTAIN BUY 4.300 SAME 4.300



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