ST Engineering gunning for more M&As over the next 5 years

It has war chest of over $500m.

According to DBS, since the group’s merger in 1997, ST Engineering (STE) group has been on track to achieve the goals set for the merger by creating a diversified business model with a global presence and customer base. DBS said the group’s strategy for growth and possible changes in revenue mix in the next 5 years were the main focus during its roadshow in the US.

Through a series of mergers and acquisitions, STE has built up capabilities by providing customized engineering solutions and services in its core segments of Aerospace, Marine, Electronics and Land Systems divisions.

DBS also noted that near term growth will come from acquisitions in Aerospace (PTF conversions in Europe), new hangar facilities in Guangzhou and engine workshop in Xiamen, and expansion into the ship repair business in the US.

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Armed with a net cash chest of more than S$500m, the group is well positioned to source for M&A for longer term growth. Management’s key concern would be to negotiate an environment of rising cost pressure in Singapore due to the curbs on foreign labour, to ensure the group’s competitiveness in the global arena.  

Currently, it boasts of multinational operations with global presence in 23 countries and 41 cities, and hires more than 22 000 employees.

With these building blocks in place, the group has been able to diversify its revenue base by reducing its reliance on the defense sector from 57% of revenues in 2002 to current 37%, with another 33% from government agencies and the balance from commercial businesses.

Asia’s dominance as a contributor of 72% of its revenue has similarly declined to 59% as the Group diversified its geographical presence.