ST Engineering shares rise 4.7% on revenue increase, special dividend

[SINGAPORE] Shares of ST Engineering rose on Thursday (Nov 13) after it posted a year-on-year increase in nine-month revenue.

The counter hit S$8.74 at 1.31 pm, before paring some gains to end the day at S$8.68. This was 4.7 per cent or S$0.39 higher than its closing price on Wednesday; some 12.5 million shares changed hands.

ST Engineering on Wednesday evening announced a 9 per cent rise in revenue to S$9.1 billion for the nine months ended Sep 30.

The group reported revenue increases in all three of its business segments. Its board has proposed a special dividend of S$0.05 per share, given 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.

Separately, ST Engineering on Wednesday announced an impairment of S$667 million for iDirect Group, its satellite communications technology subsidiary.

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ST Engineering posts 9% rise in 9M revenue to S$9.1 billion

Hilado revised his forecasts to account for this 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.