This includes a contract for the construction and maintenance of patrol boats for the Singapore Police Coast Guard.
ST Engineering’s marine arm secured $560m worth of new contracts in Q4 2018, including a mechanical and electrical (M&E) contract for the mechanical, electrical and control works for Singapore’s fifth desalination plant in Jurong Island, an announcement revealed.
Its projects include a contract awarded by the Ministry of Home Affairs for the design, construction and maintenance of fast patrol boats for the Singapore Police Coast Guard which is slated to commence in mid-2019.
Meanwhile, the firm jointly received an order with German manufacturing firm Siemens for a SCC-800 2X1 SeaFloat barge-mounted plant from Seaboard Corporations’ subsidiary Transcontinental Capital Corporation. Under the contract, ST Engineering will be responsible for the engineering design, procurement and construction of the floating power barge, as well as the balance and installation of the floating power plant.
“This ‘SeaFloat’ concept, when completed in ST Engineering’s Shipyard in Singapore, will provide the customer with a quality proven power plant at a lower cost in comparison to a similar land-based power plant,” the firm stated. “Upon completion of the construction in Q3 2020, the barge will be transported to its final destination where hot commissioning of the power generation facility will be undertaken before final delivery to the customer.”
In the US, the firm was also awarded a contract by a foreign government for the construction of two firm Logistics Support Vessels (LSVs) which are designed to carry up to 2,000 tons of cargo from strategic sealift ships to shore during operations. The LSVs are said to be repeat designs of an earlier LSV model with enhancements to include range and cargo capacity changes to suit new requirements, as well as an upgrades to the crew complement.
Additionally, the Group’s US shipyard received a contract from the Naval Sea Systems Command (NAVSEA) for the design engineering, procurement of long-lead time material and advanced production to support the new T-AGS 67 Oceanographic survey ship which is expected to be completed by May 2019.
According to RHB Research, ST Engineering's marine order wins may alleviate investor concerns following the drag o the firm's shipbuilding business earnings.
"In addition to continuing order wins for its aerospace and electronics businesses, the recent revival in marine order wins and completion of the Middle River Aircraft Systems (MRAS) acquisition could be key re-rating catalysts," RHB analyst Shekhar Jaiswal noted.
ST Engineering's MRAS acquisition is set to complete by the end of Q1 2019 anf will be fully funded by the US-denominated debt, RHB revealed. The acquisition is forecasted to lift the firm's 2019F-2020F earnings by up to 5%. Overall, ST Engineering is expected to deliver around 16% in earnings growth in 2019, of which the improvement in its marine profitability will also be a factor driving growth.
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