ST Engineering falls 6.4% after posting a rise in H1 net profit

[SINGAPORE] Shares of ST Engineering tumbled shortly after market open on Thursday (Aug 14) reporting a rise in net profit for the first half.

The counter dropped 6.4 per cent to S$8.39 as at 9.58 am on Thursday, having closed the previous day at S$8.96.

The company posted a 19.7 per cent increase in net profit to S$402.8 million for the first half-year ended June, up from S$336.5 million in the year-ago period. This was largely due to revenue growth from its commercial aerospace and defence and public security business segments, despite drag from US tariffs and foreign currency exchange.

ST Engineering shares have soared more than 80 per cent this year so far.

Citi Research analyst Luis Hilado had stated in a note on Jul 24 that the 12-month price target for ST Engineering was S$8.40, shortly after the company had announced S$4.7 billion worth of order wins. Shares of ST Engineering had been at S$8.27 when he had shared the note.

“We see STE’s topline momentum driving operational leverage and margin improvement across its core businesses. We recognize the existence of near-term risks (labor shortages, cost inflation, integration risks) but take positively that a healthy base of contracts to win can provide the economies of scale to offset such,” Hilado wrote in the note.

“We believe the steady and predictable growth in the current uncertain market conditions will drive it above its mean valuation,” he added.