The 145MW barge-mounted combined-cycle unit will be engineered and built in Singapore for delivery and installation by 2028.
This marks STE’s second collaboration with Siemens Energy after the successful EDM III project commissioned in 2022.
"While margins were undisclosed, repeat-project learnings and a proven partnership framework should aid execution," says Jaiswal in his Oct 22 note.
"We view the recent share price weakness as a buying opportunity, and continue to see ST Engineering as a defensive growth compounder – backed by resilient defence and aerospace earnings, and a recovery in the Satcom business," he adds.
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Under terms of the contract, ST Engineering will undertake design, procurement, construction, transport, and installation work while Siemens Energy provides the power island.
From the perspective of Jaiswal, this repeat order from an existing customer highlights the reliability of ST Engineering’s SeaFloat-based delivery model and further diversifies its orderbook into energy infrastructure exports.
He is of the view that this project's fulfilment period to 2028 will help provide steady workload visibility for ST Engineering’s marine business, and complement existing defence and commercial shipbuilding programmes.
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Last year, the marine unit accounted for 14% of the defence & public security business segment, and 6% of the company's total revenue.
While contract value was not disclosed, it will add to ST Engineering’s record $31.2 billion orderbook, which provides around three years of revenue visibility.
Jaiswal, noting that ST Engineering has made a series of divestments as part of its overall capital management efforts, sees upside risks over the next five years as proceeds from the sales can help lower net gearing and financing costs.
In addition, the company's aviation asset management restructuring targets asset under management growth to US$3.5 billion by 2029.
"Our 2029 forecasts remain below management’s targets, presenting upside potential," says Jaiswal.
As at 11.42 am, ST Engineering shares gained 2.67% to trade at $8.46 and is up 81.94% year to date.
