ST Engineering's profit could hit $151m in Q3: analyst

Its land systems operations may boost its profit by 20%.

Singapore Technology Engineering (ST Engineering) is expected to post profit growth of 12% YoY and 9% QoQ to around $151m in Q3 amidst rising demand in the satellite communication (satcom) industry, according to an analyst report by CGS-CIMB.

Satcom business demand is projected to inch up around 10-15% CAGR pa, which could bring similar growth to ST Engineering’s satcom profit. Also, the progressive delivery of Hunter Armoured Fighting Vehicle by its land systems operations may sustain 20% YoY growth in its profits.

STE has over the years built up its satcom capabilities through acquisitions such as iDirect (satcom products) in 2005, Parallel Limited (VSAT system) in 2010, Jettalk (revolutionary flat panel antenna for the aviation industry) in 2018, Glowlink (interference cancellation) and Newtec (high throughput capabilities, etc.) in 2019.

“Given the proven track record and legacy of network connectivity, STE’s hubs are priced competitively (‘thousands to hundreds of thousands of dollar value’) vs. competitors (above US$200k). Terminal costs are priced lower in the region of thousands of dollars but unit sales are more,” said Siew Khee Lim, an analyst at CGS-CIMB.

Apart from its satcom operations, ST Engineering’s aerospace segment is expected to enjoy a full quarter earnings contribution from MRA Systems with a further $8m in profit. Electronics is also likely to build on its profitability from the stronger H2 period. Lastly, its marine segment will see improvement in shipbuilding as it executes the 2018 contracts.