ST Engineering positions for growth as aerospace unit takes flight

Aerospace sales are poised to grow by 26.2% in 2019.

The strong and steady flight of ST Engineering’s aerospace segment is fast cementing the firm’s growth prospects as highlighted in the firm’s strong Q3 results.

Net profit for ST Engg’s aerospace sector rose 13% YoY to $55.4m in Q3. It also secured $590m worth of contracts in Q3 including several multi-year agreements for airframe, engine and component maintenance and engine wash services.

“Strong performance of Aerospace segment drives slight topline growth,” Suvro Sarkar, analyst at DBS Group Research said in a report.

Also read: ST Engineering hits largest deal with $868m buy of GE's plane parts manufacturer

In fact, sales growth under the firm’s aerospace segment is poised to lead the pack at 26.2% in 2019, noted Sarkar. Sales for the land systems and electronics segment is forecasted to grow by 16% and 9.04% respectively in 2019 whilst the marine sector is expected to remain muted as sales are poised to fall 3.71%.

Although the aerospace along with the marine segment may be more vulnerable to escalating trade tensions given their significant operations in the US, the relatively larger insulation of the Electronics and Land Systems business as well as the diversity of ST Engineering’s operations is set to keep away negative headwinds to a minimum, said Siew Khee Lim at CIMB

“Indeed, the group ended 9M18 with an order book of S$13.3b, of which S$1.6b will be delivered in the remaining months of 2018, meaning that at least S$1.6b of revenue is secured for the upcoming 4Q,” Pei Han Low, analyst at DBS added.

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