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As of now, up 13 cents at $9.52, should be on its way to $10 before the FY result release in mid Feb.
MrBear12 ( Date: 15-Jan-2026 09:20) Posted:
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10 dollar stock
FT.com
European defence rally falters on Ukraine ceasefire talks.
Share prices fall as Trump vows to involve Zelenskyy in peace discussions with Putin and Kyiv promises to buy US weapons.
European defence stocks fell on Tuesday as progress towards a ceasefire in Ukraine led investors to question whether the sectors blistering rally could be over.
Shares in Italian defence company Leonardo and Germany Hensoldt both slumped 9.5 per cent, while shares in Rheinmetall, also of Germany, fell 4.9 per cent.
Still
, net income cannot cover both CapEx and dividend payouts.
STE has a garbaga balance sheet with massive useless goodwill balance and huge debt load.
No wonder STE started selling off their profitable businesses to pay down their huge debt.
$3.6B TransCore acquisition in 2022 destroyed their balance sheet, and made it over-indebted.
overpaying for useless business under USS segment, which can' t generate any meaningful profit, sad $12m in EBIT in H1 2025.
30-June-2025 balance sheet:
total shareholder equity: 2,714,625,000
intangibles (goodwill, etc): 4,514,124,000
net tangible book value: NEGATIVE SGD $1.8B
Good luck holding STE !
DYODD
MrBear12 ( Date: 19-Aug-2025 12:42) Posted:
Operating cash generated 832M.
Covers dividend and cap ex
STEng can pay the dividends and sustain growth
alexvar ( Date: 19-Aug-2025 12:30) Posted:
STE shares are doomed.
Its net income is not even enough to cover the CapEx and dividend payouts.
H1 2025
net profit: 414m
dividend payout: 281m
Capital expenditures: 421m
Net profit - dividend payout - CapEx = ~ 287m deficit.
STE net profit barely cover its Capex, no money left to pay dividends.
DYODD. |
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Operating cash generated 832M.
Covers dividend and cap ex
STEng can pay the dividends and sustain growth
alexvar ( Date: 19-Aug-2025 12:30) Posted:
STE shares are doomed.
Its net income is not even enough to cover the CapEx and dividend payouts.
H1 2025
net profit: 414m
dividend payout: 281m
Capital expenditures: 421m
Net profit - dividend payout - CapEx = ~ 287m deficit.
STE net profit barely cover its Capex, no money left to pay dividends.
DYODD. |
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STE shares are doomed.
Its net income is not even enough to cover the CapEx and dividend payouts.
H1 2025
net profit: 414m
dividend payout: 281m
Capital expenditures: 421m
Net profit - dividend payout - CapEx = ~ 287m deficit.
STE net profit barely cover its Capex, no money left to pay dividends.
DYODD.
The Sakura Research report on ST Engineering (STE) raises concerns about over-leverage, asset intensity, persistent negative free cash flow after dividends, and the performance of the TransCore acquisition. Here is an expert validation and commentary based on the latest available financial data and analyst consensus:
1. Leverage and Liquidity
- Leverage: STE&rsquo s total borrowings stood at S$5.8 billion at end-2024, down from S$6.1 billion in 2023, with a gross debt/EBITDA ratio improving from 4.2x to 3.6x[1]. While this is elevated compared to pre-TransCore levels, it is being actively managed, and the group maintains strong credit ratings (Aaa/stable by Moody&rsquo s, AA+/stable by S& P)[2][1].
- Liquidity: The group&rsquo s current ratio is below 1, reflecting net current liabilities of S$915 million at end-2024, mainly due to a US$750m medium-term note reclassification to current liabilities (maturing in April 2025). Management states it has sufficient resources and plans to refinance this through internal funds and new debt issuance[3]. This is a watchpoint but not an imminent insolvency risk.
2. Profitability, CapEx, and Dividend Sustainability
- Profitability: STE posted record net profit of S$702 million (+20% y-o-y) in 2024, with revenue up 12% to S$11.28 billion and EBIT up 18% to S$1.08 billion[4][5][6][7][8]. Return on equity was 26.3%[5][8], and net margin was 6.2%[9]. While the group&rsquo s return on assets is modest (ROA ~3.9%), this is typical for asset-heavy engineering firms[9].
- CapEx vs. Net Income: Over 2022&ndash 2024, cumulative CapEx (S$1.88b) slightly exceeded cumulative net income (S$1.82b), as cited in the report. However, STE&rsquo s strong operating cash flow (S$1.7b in 2024, +46% y-o-y) supports both CapEx and dividends[10][7].
- Dividend: STE raised its annual dividend to 17.0 cents/share in 2024 (from 16.0 cents), with a payout ratio under 70% and no indication of a cut[5][8]. Analyst consensus expects stable dividends[11].
3. TransCore Acquisition and Goodwill
- TransCore Performance: The Urban Solutions & Satcom (USS) segment, which includes TransCore, posted S$1.96b revenue and S$40m EBIT in 2024, up from S$10m EBIT in 2023[5][10][12]. While USS EBIT margin remains low, the segment has shown improvement, and management expects further gains from ongoing restructuring and integration[13].
- Goodwill: Goodwill is about 20% of total assets and exceeds 100% of equity, as the report notes. However, auditors and management have not recognized a material impairment, citing improved USS performance and positive outlook[5][10][3]. The absence of impairment is consistent with accounting standards, provided future cash flows support the carrying value.
- S& P Downgrade: S& P did downgrade STE&rsquo s rating post-TransCore due to higher debt, but the rating remains strong (AA+/stable)[14][2].
4. Cash Flow and Solvency
- Operating Cash Flow: STE generated robust operating cash flow (S$1.7b in 2024), covering CapEx and supporting debt service and dividends[10][7].
- Solvency: Despite a net current liability position, STE&rsquo s strong cash flow, order backlog (S$28.5b), and refinancing plans mitigate near-term solvency concerns[10][1][3].
5. Analyst and Market Consensus
- Growth Outlook: Analysts forecast continued growth, driven by commercial aerospace, defense, and improving USS performance. Profit is expected to grow at a 15% CAGR from 2023&ndash 2026[11][15].
- Valuation: The market and analysts do not price in a near-term dividend cut or insolvency risk. Instead, they see STE as a defensive growth stock with a strong order book and improving fundamentals[11][13][15].
Conclusion
- Valid Concerns: The report correctly highlights STE&rsquo s elevated leverage, asset intensity, and the underperformance of the USS segment post-TransCore. Goodwill is high, and USS margins are still low.
- Overstated Risks: However, the claims of imminent dividend cuts, restructuring, or insolvency are not supported by current financials. STE&rsquo s record profits, strong cash flow, order backlog, and ongoing deleveraging indicate a stable outlook[4][5][6][10][1][7][8]. The lack of impairment is consistent with improved segment performance and accounting standards.
- Balanced View: Investors should monitor USS execution and leverage, but current data and analyst consensus do not support a bearish case as extreme as Sakura Research&rsquo s.
In summary: STE faces challenges from its TransCore acquisition and leverage, but the company remains profitable, cash generative, and committed to dividends. The risk of near-term financial distress or drastic restructuring appears low based on the latest results and market consensus
[4][11][5][6][10][15][1][7][8].
⁂
- https://www.stengg.com/getmedia/d2e74b05-74c5-4c87-bf09-dae8b9cbb25c/ST-Engineering-FY2024-Results-Presentation.pdf
- https://www.stengg.com/getmedia/417f2cee-0358-4023-9402-bf014ddc1635/ST-Engineering-1H2024-Results-Presentation.pdf
- https://www.stengg.com/getmedia/653616f9-7ba2-4cde-9ffd-5c755355cc8e/ST-Engineering-FY2024-Results-Financial-Statements.pdf
- https://www.stengg.com/en/newsroom/news-releases/fy2024/
- https://www.marketscreener.com/quote/stock/SINGAPORE-TECHNOLOGIES-EN-6491153/news/Singapore-Technologies-Engineering-ST-Engineering-FY2024-Results-Announcement-49174868/
- https://sbr.com.sg/aviation/news/st-engineering-net-profit-20-702m-in-2024
- https://www.stengg.com/getmedia/32fd93e7-c34f-4e28-af64-ddc0bb105d3f/ST-Engineering-FY2024-Results-Announcement.pdf
New piece from folks at Sakura Research
We are short ST Engineering (&ldquo STE&rdquo or the &ldquo Group&rdquo ).
In our opinion, STE is an over-leveraged and asset-heavy company that requires significant and regular capital expenditures (CapEx) annually. STE faces the risk of a dividend cut, restructuring, and/or potential insolvency (with its current ratio at 0.89 and quick ratio at 0.33 as of end-2024).
The Group&rsquo s reported annual net income has not been sufficient to cover its annual expenditures and dividend payouts, in any year from 2015 to 2024.
Over the past three years (2022&ndash 2024), the Groups cumulative capital expenditures (S$1.88 billion) have actually exceeded its reported cumulative net income (S$1.82 billion). During this period, the Groups average return on assets (ROA) was a dismal 3.9 percent.
The Group made its largest-ever investment with the S$3.6 billion acquisition of TransCore (TC) in early 2022, when US interest rates were near 0 percent. At that time, S& P downgraded the Group&rsquo s stand-alone credit profile (SACP) to BBB+ from AA-. TransCore, US-based toll collection solutions provider, was added to the Groups Urban Solutions & Satcom (USS) segment.
As of the end of 2024, goodwill accounted for approximately 20 percent of the Group&rsquo s total assets and 106 percent of its shareholders equity.
As of the end 2024, the USS segment accounted for 37.2 percent of Group&rsquo s total assets, yet it generated dismal 3.7 percent of Groups total EBIT.
The USS segment has failed to deliver any meaningful increase in EBIT since 2022, despite its asset base growing from S$2.2 billion prior to the TC acquisition to a staggering S$6 billion in 2024. In fact, in 2023, the entire USS segment generated only about S$10 million in EBIT &mdash its lowest level since 2020 &mdash despite the major TransCore acquisition in early 2022. Unsurprisingly, in January 2024, the Group announced the departure of Mr. Tracy Marks, President & CEO of TransCore. Yet absolutely no goodwill impairment was recorded by STE in 2023.
In our view, the Group&rsquo s management has failed to properly test for impairment the S$2.3 billion in goodwill associated with the TC acquisition, despite the USS segment&rsquo s weak EBIT performance, high CapEx requirements, senior executive departures, and tighter financing conditions post-acquisition.
Based on elevated U.S. Fed interest rates since the early 2022 acquisition, low average EBIT generation by the USS segment (S$26 million annually from 2022 to 2024), and high average annual CapEx in the segment (S$58 million annually over the same period), we estimate a goodwill impairment of about S$1.7 billion using discounted cash flow analysis. This goodwill impairment would amount to approximately 240 percent of the Group&rsquo s reported net profit of S$702 million in 2024.
The Group&rsquo s management must be held accountable to its investors &mdash particularly Temasek &mdash for the costly, under-performing, and value-destructive TransCore acquisition.
Local regulators and auditors should closely examine the absence of any goodwill impairment taken by STE in 2023 and 2024, given the mounting evidence to the contrary.
Use of Sakura Research materials is at your own risk.
THE RESEARCH REPORT EXPRESSES SOLELY OUR OPINIONS.
Opinions only. DYODD.
STE price might end higher tomorrow, maybe hitting S$6.30 breaking previous record high of $6.27
Looks like STE might hit $6.27 soon
wooncs8870 ( Date: 13-Mar-2025 13:05) Posted:
| IMO, it is unlikely to hit $9 by this year, more likely $7 to $8, of course this is just a guesstimate only |
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IMO, it is unlikely to hit $9 by this year, more likely $7 to $8, of course this is just a guesstimate only
I predict by this year.
wooncs8870 ( Date: 13-Mar-2025 11:13) Posted:
By when will the price hit $9? Open date is not good enough, should state the end date rather than leave it open. BY this year end or next year?
investshare ( Date: 13-Mar-2025 11:08) Posted:
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By end 2028.
wooncs8870 ( Date: 13-Mar-2025 11:13) Posted:
By when will the price hit $9? Open date is not good enough, should state the end date rather than leave it open. BY this year end or next year?
investshare ( Date: 13-Mar-2025 11:08) Posted:
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By when will the price hit $9? Open date is not good enough, should state the end date rather than leave it open. BY this year end or next year?
investshare ( Date: 13-Mar-2025 11:08) Posted:
Remember what I said
investshare ( Date: 12-Mar-2025 11:05) Posted:
It will hit $9.
Good news soon? |
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Remember what I said
investshare ( Date: 12-Mar-2025 11:05) Posted:
It will hit $9.
Good news soon? |
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STE price is now 6.19 going to break previous high of $6.27 today.
STE is trending up and the target price of $7 will reach by end of June 2025. Watch out for the action before June
Ukraine agreed peace deal
investshare ( Date: 12-Mar-2025 11:05) Posted:
It will hit $9.
Good news soon? |
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It will hit $9.
Good news soon?
Fully agree
wooncs8870 ( Date: 11-Mar-2025 16:04) Posted:
| When recession sets in, the best investment stock will be defence stock like ST Engineering. It will be able to remain stable in such chaotic times |
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