ST Engineering shares jump as much as 5.4% on revenue increase, special dividend
Its nine-month revenue rises 9% to S$9.1 billion
[SINGAPORE] Shares of ST Engineering jumped as much as 5.4 per cent on Thursday (Nov 13) after an increase in its nine-month revenue.
The counter climbed S$0.45 to S$8.74 as at 1.31 pm, after it reported on Wednesday a 9 per cent rise in revenue to S$9.1 billion for the nine months ended Sep 30.
ST Engineering’s shares had closed at S$8.29 before the results were announced.
The group reported strong performances across all its three business segments, with the revenue increasing despite an impairment of S$667 million for iDirect Group, its satellite communications technology subsidiary.
The company also proposed a special dividend of S$0.05 per share in light of cash proceeds from recent divestments.
Citi analyst Luis Hilado noted that ST Engineering’s management had indicated that there is continued momentum for its defence and public security segment, as an international pipeline in Europe, Middle East and Asia remains active.
He revised his forecasts to account for the iDirect impairment as well as the S$50 million reduction in full-year expenses from the accelerated impairment. His target price was set at S$8.29, with a “neutral” call.
He added that, on a recurring-profit basis – on which dividend payout is based – the impact was “minor”, but that it was “naturally significant” on a reported-profit basis.
“The plans for a special dividend of S$0.05 (per share) on top of the S$0.18 regular dividend may help cushion the share-price reaction to the impairment,” he said.
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