ST Engineering's half-year order book hit record-high of $15.6b

Around $3.8b of it is expected to be delivered in the second half of the year.

ST Engineering’s order book has reached a record-high $15.6b as at end-June, which underpins healthy growth prospects in the near-to-medium term, according to analysts.

Of this book figure, $3.8b is expected to be delivered in H2, according to OCBC Investment Research.

“The order book provides revenue visibility of close to 2.5 years. Including the $1b contract for the design and construction of the first Polar Security Cutter, STE has reported order wins worth $4.6b in H1. This is compared with the reported order wins worth $5.2b in 2018,” explained Shekhar Jaiswal, analyst at RHB Group. 

Also read: ST Engineering propelled by bloated $13.4b orderbook in Q2

ST Engineering’s stock went up 20.9% YTD, outpacing the STI which only inched up 2.4% as of 14 August.

In Q2, ST Engineering's profits rose 18% YoY to $138.2m from $117.5m in the same period in 2018 as earnings from its marine business surged 55%. Revenues edged up 8% YoY to $1.78b from $1.65b over the same period. 

Thanks to its defensive nature, ST Engineering is expected to continue enjoying investor favour as the company holds its own against uncertain market conditions, suggested Suvro Sarkar, an analyst at DBS.

Moreover, recent acquisitions in the aerospace and electronics division, near-term organic growth to be driven by workload increase at engine MRO shops and medium- to long-term growth from leveraging to Smart City and IOT-related products and contracts also bode well for the firm.

In particular, Jaiswal noted that the Middle River Aerostructure Systems (MRAS) acquisition is expected to remain earnings accretive despite accounting for about $10m of integration costs in H2 and in 2020.