RHB lifts ST Engineering target price to S$10.70 on record contract wins
The group’s total contract awards for 2025 stand at S$18.7 billion
[SINGAPORE] RHB Bank maintained its “buy” call on ST Engineering while raising its target price to S$10.70 from S$9.40, it said in a note on Thursday (Jan 29).
The revised target price represents a potential 13 per cent upside from current trading levels of S$9.48 as at the time of the report.
“Our positive view is braced by record 2025 contract wins, improving balance sheet post divestments, and upside from international defence amid supportive geopolitical backdrops and sustained defence and public security momentum,” said analyst Shekhar Jaiswal.
Record contract wins
The bullish re-rating follows the group’s announcement on Wednesday regarding its order book performance. The group’s total contract awards for 2025 amounted to a record S$18.7 billion, after having secured S$4.7 billion in new contracts for the fourth quarter of 2025.
This represented a roughly 49 per cent year-on-year increase from the S$12.6 billion recorded in 2024.
Key highlights from the contract wins include:
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- Defence and public security: Leading the pack with S$2.5 billion in wins (47 per cent year-on-year increase), including contracts for Ministry of Defence’s next-generation infantry fighting vehicle programme and security systems for the Singapore Prison Service.
- Commercial aerospace: Secured S$1.7 billion in new contracts, driven by multi-year airline maintenance, repair and overhaul agreements, including a five-year nacelle support deal for LOT Polish Airlines.
- Urban solutions and satcom: Contributed about S$500 million, with wins in mobility and transport infrastructure such as the Changi Airport Terminal 2 Skytrain electronics and 250 electric buses for the Land Transport Authority.
RHB noted that the defence and public security segment has now delivered five consecutive quarters of year-on-year growth in order wins, supported by a favourable geopolitical backdrop.
“The macro backdrop is also turning more supportive for international defence: Rapid technology innovation, heightened geopolitical tensions and sharper focus on supply chain resilience are accelerating procurement cycles, lifting defence budgets and increasing localisation requirements,” said the analyst.
Upcoming financial results
ST Engineering is scheduled to report its results for the second half and full year of 2025 on Feb 27.
RHB forecasts a strong showing, expecting H2 recurring net earnings to come in at about S$430 million – a 17 per cent year-on-year increase, aided by improved margins in the commercial aerospace sector.
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