After tolling system contracts, ST Engineering to post 14-17% profit growth

Its strong order book will raise the firm’s earnings growth.

With its new tolling system contracts in the US, RHB said ST Engineering will see an increased profit at 14-17% in 2023 to 2024.

Its order book will also make its outlook  “solid and defensive.” Which is why RHB maintained its buy call for the firm, with a target price of $4.15.

Its latest order backlog was at $23.1b, which excludes orders from recently sold US marine business. This provides over two years of revenue visibility.

“We estimate that STE could continue to pay a minimum of 4 cents per quarter of DPS (ie 16 cents of annual DPS) during the forecast period, implying a healthy yield of c.4%,” RHB also said in its report.

High ESG score

Amidst claims of greenwashing, RHB said ST Engineering has “superior” green goals metrics. 

The firm has an ESG score of 3.40, which is above Singapore’s median score of 3%.

“We attribute an 8% ESG premium to the fair value of $3.85,” said RHB.