ST Engineering Aims for S$17 Billion in Revenue, Higher Net Profit Margin by 2029

ST Engineering Eyes S$17 Billion Revenue and Net Profit Improvement

[SINGAPORE] ST Engineering expects to achieve a revenue of S$17 billion and a net profit improvement that outpaces its top-line increases by up to five percentage points annually over the next five years, said group CEO Vincent Chong on Tuesday (Mar 18).

Revenue Breakdown

The group expects to reap S$6 billion in revenue from its commercial aerospace segment, more than S$7.5 billion from its defence and public security segment, and S$4.5 billion from its smart city unit by 2029.

FY2024 Performance

For FY2024, ST Engineering posted S$11.3 billion in revenue and S$702.3 million in net profit, while its order book came in at S$28.5 billion.

Growth Strategies

The engineering powerhouse will raise its top line by improving its core businesses, including digital business, defence, premier maintenance, repair and overhaul engines, and smart mobility, said group CFO Cedric Foo. He noted that heightened geopolitical tensions and increased defence spending by some governments bode well for the group’s defence business.

New Venture Areas

ST Engineering will look at construction robotics, decentralised hydrogen production, and marine renewables as new venture areas.

Dividend Policy

The group expects a higher top line with scale effects, improved product and project mix, procurement and productivity savings, and a reduced interest expense to drive a higher net profit margin. Dividend per share will rise in tandem with higher earnings as ST Engineering unveiled a new dividend policy that takes effect from FY2026, paying out a third of its year-on-year increase in net profit as incremental dividends.

R&D Spending

The group will maintain its research and development spending, at 4 to 5 per cent of group revenue for the next five years.

US Tariffs

Noting that the Trump administration has been imposing tariffs to protect the United States since President Donald Trump took office in January, Chong said it is "too early to tell the effects" and pointed out that 30 per cent of ST Engineering’s revenue is generated out of the US. He added, "We don’t think we would be disadvantaged over our competitors."

Conduent Allegation

The group CEO also denounced the allegation of ST Engineering’s ties with the Chinese Communist Party as "fearmongering" by Conduent, a competitor of ST Engineering’s US subsidiary TransCore that provides tolling technology and traffic management solutions.

Conclusion

ST Engineering is poised for growth, with a strong revenue and profit outlook over the next five years. The group’s focus on improving its core businesses, exploring new venture areas, and maintaining its R&D spending will drive its future success. With a new dividend policy in place, shareholders can expect a higher return on their investment.

FAQs

Q: What is ST Engineering’s revenue outlook for the next five years?
A: The group expects a revenue of S$17 billion.

Q: What are the key drivers of ST Engineering’s top-line growth?
A: The group will raise its top line by improving its core businesses, including digital business, defence, premier maintenance, repair and overhaul engines, and smart mobility.

Q: How will ST Engineering maintain its R&D spending?
A: The group will maintain its research and development spending, at 4 to 5 per cent of group revenue for the next five years.

Q: What is the outcome of the appeal by Conduent, a competitor of ST Engineering’s US subsidiary TransCore?
A: The outcome of the appeal is not out yet, and ST Engineering has not included the deal in its order book.