ST Engineering's Singapore Navy deal could possibly be worth $2b

Shipbuilding alone may be $1.76b.

According to Phillip Securities, on 30 Jan 2013, STE announced that they had been awarded a contract for the design and construction of eight new vessels to replace the existing Fearless-Class Patrol Vessels for the Singapore Navy.

Design of these vessels will commence immediately with delivery scheduled from 2016 onwards. The firm believes that this contract could be one of the biggest naval shipbuilding projects for ST Marine in recent history.

Here's more from Phillip Securities:

The latest shipbuilding contract that was announced for the Singapore Navy was worth S$400mn for the ship and submarine rescue system and maintenance services.

There was no value disclosed for this contract. As every naval project is unique, it is difficult to estimate the exact value for this project.

However, as a rough gauge, we can reference a comparable contract win for the Royal Navy of Oman that was worth S$880mn for four Fearless-Class Patrol Vessels.

If we assume that each vessel for the current contract is of similar value, the shipbuilding part of the project would be worth S$1.76bn (2X S$880mn). However, the latest contract win for the Singapore Navy also includes the supply of core combat systems and combat system integration solutions by the Electronics division.

Hence, we believe that this contract could be worth approximately S$2bn after considering contributions from the Electronics part of the project.

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