“As a key Singapore defence contractor, ST Engineering’s defence and public security (DPS) sector will enjoy revenue visibility as more contracts are awarded,” she adds.
PhilipCapital analyst Peggy Mak has initiated a “buy” call on Singapore Technologies Engineering (SGX:S63
) (ST Engineering) with a target price of $4.50. The analyst’s target price is based on a discounted cash flow model (DCF) valuation, and she expects a return on equity (ROE) and return on invested capital (ROIC) of 26.1% and 14.6% respectively in FY2024.
Amidst heightened geopolitical tensions and cybersecurity threats, Singapore has expanded its defence and security spending by 12% y-o-y in FY2021 and 17% in FY2022, which well exceeds the 4% average annual growth in the area from FY2010 to FY2020. In FY2023, this average annual growth is expected to rise to 6%, says Mak.
