ST Engineering CEO Vincent Chong. — The Straits Times
SINGAPORE: ST Engineering (STE) has been transitioning from a yield stock to a yield-cum-growth stock over the past few years, and the investment community is beginning to recognise this.
The trajectory will continue to be supported by strong growth and a robust order book, which now stands at almost S$28bil, according to Vincent Chong, group president and chief executive of the Singapore-listed aerospace, engineering and defence group.
Earlier in August, STE reported a 19.9% rise in first-half net profit to S$336.5mil, on the back of a 13.5% increase in revenue to S$5.52bil.
Commercial aerospace saw earnings before interest and taxes (Ebit) rise 7% to S$190mil (up 9%); while defence/public security Ebit grew 8% to S$301mil; and urban solutions bounced back into the black with S$9mil after a loss of S$34mil a year earlier.
“What we are now seeing is the results of a group strategy which we started developing in 2016,” Chong said.
“Project Columbus” was initiated to develop the group’s growth strategy when Chong, 55, took over at the helm of the company eight years ago, to enable STE to adapt to the changing external environment and strengthen core businesses, while also exploring new frontiers for growth.
Key elements of this strategy were to sharpen capital allocation, streamline portfolios, acquire new businesses to supercharge growth and technological prowess.
In the process, STE exited 16 different businesses, acquired new capabilities in urban solutions and smart mobility through its US$2.68bil purchase of Transcore in 2022, and moved up the value chain into becoming an aerospace original equipment manufacturer via its US$630mil acquisition of engine nacelle maker MRAS in 2019.
Group revenue has increased 31% between 2021 and 2023, translating into a compounded annual growth rate of 15%, said Chong. Despite the challenges posed by the Covid-19 pandemic, when global aviation totally shut down for two years, group net profit grew by 3% during the same period, he added.
Today, STE is the world’s largest independent airframe maintenance, repair and overhaul provider across facilities in Singapore, China, and the United States. The segment includes manufacturing nacelles – housing for aircraft parts – for the A320neo and converting retired passenger aircraft to freighters.
Its purchase of Transcore transformed STE into a notable player in smart mobility and urban solutions, including congestion pricing. It has secured international road and rail projects in cities such as Bangkok, Kaohsiung, Sydney, Ontario, and Chennai.
It has also strengthened its presence in the defence business, adding cyber security and artificial intelligence analytics to its offerings, which includes weapon systems and combat vehicles. — The Straits Times/ANN
