ST Engineering's order book pegged to hit a record $13b

Thanks to defence-related business.

According to Maybank Kim Eng, based on the recent Singapore Budget 2013, Singapore’s defence expenditure is expected to come in at SGD12.3b for 2013, capping a CAGR of 4% since 2003.

This increasing trend over the years will underpin future growth of STE’s defence-related business, primarily derived from its Land Systems division (ST Kinetics).

Here's more from Maybank Kim Eng:

In FY2012, defence-related sales comprised 37% of total revenue. Bumper Navy contract to push orderbook past record. Lending further weight as the key client of ST Engineering, MINDEF, through the Singapore Navy recently entered into a vessel design and build contract for 8 patrol vessels which we estimate could come in at a value of SGD1.8b, extrapolating from past contract values.

We reiterate our view that this contract is likely to push STE’s orderbook to record levels once again (~SGD13b), catalysing the stock to reach new heights.