In total, ST Engineering is estimated to have secured contract wins between $19 and 20 billion in FY2025 - the highest level in 5 years.
They note that ST Engineering's last "sizeable" land system platform contract was back in April 2020, for the second phase of the Hunter Armoured Fighting Vehicle.
For the coming 2HFY2025 results on Feb 27, Lim and Kande expect the company to report a 12% h-o-h jump in core earnings of $450 million.
Besides the seasonally stronger second half, other drivers include higher EBIT margins in 2HFY2025 of 10.8% for its commercial aerospace business, up from 1HFY2025's 9.5%.
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However, they expect defence & public security margin to remain slightly lower in 2HFY2025 at 12%, versus 1HFY2025's 14% due to seasonally weaker execution of milestone projects.
They expect FY2025 earnings to be $471 million, up from $423 million, having taken into account the gains from the divestment of its stake in MRO joint venture last month.
Even with this recent win, Lim and Kande are upbeat that the company may clinch other land platforms deals such as the Bronco and Terrex 8x8 from Italy, Finland, Austria and the Middle East in the near term.
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"We believe winning international platform contracts is a key catalyst," the analysts state.
Their revised target price of $10.20, up from $9.50, is pegged at 3 s.d above the company's 17-year mean.
ST Engineering shares dipped 0.53% to trade at $9.35 as at 10.03 am.
