Better traction in Smart City solutions could boost ST Engineering's order book

Its Newtec acquisition and satellite communications business makes it a standout for Smart City initiatives.

ST Engineering’s better traction in Smart City solutions could uplift its order book, according to OCBC Investment Research (OIR).

The research firm believes that ST Engineering has had a good start to the year in terms of contract wins, which have increased its order book to a high of $14.1b as of March, of which about $4.2b will be delivered in 9M19.

Also read: ST Engineering's Q1 profits grew 11% to $131.1m

“The group has also completed the acquisition of MRA Systems and is now focused on integrating the business with the aerospace segment. As for its Newtec acquisition, this is expected to be completed in 2H19, and when combined with the existing satellite communications businesses, this should further enhance STE’s value proposition for its Smart City initiatives,” OIR said.

Additionally, OIR believes that potential catalysts going forward include the US Postal Service’s tender for next-gen electric trucks, as well as the exercising of options for two polar security cutters by the US Coast Guard.

ST Engineering started 2019 on a high note after profits jumped 11% YoY to $131.1m in Q1 from $117.7m in 2018. Revenue also edged up 5% YoY from $1.65b to $1.73b.