ST Engineering rebounds 5% after drifting over past month; Goldman initiates coverage

[SINGAPORE] Shares of ST Engineering rose 5 per cent in early trade on Friday (Sep 18), a day after Goldman Sachs recommended “buy” on the stock.

The technology, defence and engineering group’s share price touched S$10.70 within two minutes of market open, gaining S$0.51 per share. By noon, it pared some gains, but was still up 3.6 per cent at S$10.56.

ST Engineering shares have been on a downward trajectory in the past month, falling 8.6 per cent from S$11.15 on Aug 18 to S$10.19 on Sep 17.

The reversal comes after Goldman Sachs initiated coverage on the stock on Thursday, with analyst Herbert Lu setting a target price of S$13.20.

His rating is in line with 11 other analysts, with four recommending “hold” and one recommending “sell”, Bloomberg data indicated. The consensus target price stands at S$11.77.

Meanwhile, a separate report from Morningstar on Thursday recommended “hold” for ST Engineering with a target price of S$11.10.

“Although headline profit growth numbers are decent, contract wins in the defence segment appear to be lagging expectations,” said Lorraine Tan, Morningstar’s director of equity research, Asia.

“However, international contract wins are strong, and the group remains upbeat on its second-half outlook.”

H1 profit up

ST Engineering in August posted a 27.1 per cent rise in first-half net profit to S$512.1 million, up from S$402.8 million in same period a year earlier. The results were driven by underlying performance and cost savings across all its three business segments, it said.

The company that month also announced that it had secured S$2.9 billion in new contracts in the second quarter of 2026.

These comprised S$1.2 billion from the commercial aerospace segment, S$1.2 billion from the defence and public-security segment and S$500 million from the urban solutions and satcom segment.

Its defence and public-security segment’s digital systems business was awarded several contracts, including a counter-drone solution for air defence deployment in an Asian country.

It also secured the provision of video-intelligence solutions to enhance public safety in Singapore, high-performance graphics processing unit infrastructure, as well as training and simulation solutions.

The land systems business secured orders from repeat international customers for its 40 mm ammunition, a contract for several types of assault rifles from a law enforcement agency in South-east Asia and multi-year contracts for ground support equipment from an aviation customer.

Meanwhile, the marine segment provided maintenance, repair and overhaul (MRO) services to the United States Naval Ship fleet, while the defence aerospace business delivered MRO support for international military transport aircraft.

Since reporting its Q2 orders in August, ST Engineering also said that its urban solutions business secured a S$750 million turnkey rail services contract for the extension of a metro line in Taiwan.

Its deal pipeline goal of US$11 billion for international defence over the next 18 to 24 months, announced in the first quarter of 2026, is on track.

Contract wins for 2026 are expected to be similar to 2025’s S$18.7 billion figure.