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
- ST Engineering recognized S$350m worth of COVID-19 related government support in 2020.
- Going into 2021, ST Engineering targets to offset about S$250m of lower government support through cost savings, partial business recovery and lower impairments. The order book stood at S$15.4b as at end Dec 2020, of which S$5.3b is expected to be delivered in 2021.
- As a show of resilience, ST Engineering maintained its dividend at S$0.15 per share for 2020, which has remained consistent for years now.
- See ST Engineering Share Price; ST Engineering Target Price; ST Engineering Analyst Reports; ST Engineering Dividend History; ST Engineering Announcements; ST Engineering Latest News.
- We maintain our fair value estimate of S$4.30 on ST Engineering.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2021-02-19
SGX Stock
Analyst Report
4.300
SAME
4.300
