This latest win adds to the company's already all-time high outstanding order book of $28.5 billion, which provides three years of revenue visibility.
"With local operations in its global business locations, ST Engineering’s business should be relatively defensive, and a bit shielded from the escalating trade war.
"We expect ST Engineering to outperform the Straits Times Index this year, as we believe STE will be able to report double-digit profit growth in FY2024 to FY2027," says Jaiswal in his April 14 note.
More specifically, he expects the company to deliver its 8.6% revenue and up to 13.6% profit CAGR targets for FY2024 to 2029.
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Jaiswal says that while his FY2029 estimates are below the company's own target, he believes there could be upside risks to the international defence business with potentially more order wins and higher margins.
He believes that rising global demand for smart city solutions could translate into more order wins for the company's urban solutions and satcom segment, similar to the latest Taiwan turnkey rail services contract.
"Upside risks could also come from lower interest costs amidst more aggressive debt repayment and falling interest rates," says Jaiswal.
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He also notes that ST Engineering is looking to recycle capital by transitioning its aviation asset management business to a fund structure.
"This could also support faster growth in assets under management and bring greater revenue synergies to its MRO and passenger-to-freighter conversion business," he says.
For now, the company's FY2029 targets have not taken into account any acquisitions but Jaiswal believes that given the company's recent track record, portfolio optimisation efforts, and focus on growing its commercial aerospace and defence & public security segments could lead to more M&A opportunities.
ST Engineering has gained more than 40% year to date, staying steady at current levels even as other stocks swoon over uncertainties caused by US tariffs.
Even so, Jaiswal is of the view at that current levels, ST Engineering's valuation is not expensive.
"While the current forward P/E is above ST Engineering's historical forward valuation, we believe this does not adequately capture the strong growth that the company is expected to deliver over the next five years vs what it has delivered in the past.
"For investors looking at capital return, we believe there is scope for higher dividend payments as we assess the FCF yield to be significantly higher than the dividend yield throughout the forecast period," says Jaiswal.
As at 11.03 am, ST Engineering shares gained 1.95% to trade at $6.80.
