"ST Engineering's near-term catalysts include sizeable international defence awards, commercial aerospace capacity ramp-up translating into margin expansion, and clearer strategic direction for Satcom," says Jaiswal, noting that the company has built up an order book of $33.2 billion.
"As international defence scales, we believe it merits a re-rating towards regional defence players vs a Singapore industrial holding," he adds.
ST Engineering is winning new businesses in other key segments outside of defence and public security as well.
Recently, EFW, ST Engineering’s freighter-conversion joint venture with Airbus has secured an A330-300 passenger-to-freighter contract from Hong Kong-based APAL, which is betting on rising China cargo-market demand.
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"The news reinforces STE’s aerospace adjacencies and China cargo exposure. We view the impact on STE to be strategically positive for workload visibility and franchise strength, although near-term earnings contribution should be modest given the single-aircraft scope," says Jaiswal.
In Singapore, ST Engineering, with a contract from the government, is rolling out the a next generation intelligent transport system for better traffic control.
Its US-based unit, TransCore, has successfully deployed the dynamic tolling system for Kansas’ first express lane facility, with a seven-year base maintenance and image-review contract.
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"Both announcements reinforce ST Engineering’s credentials in software-led, mission-critical road infrastructure. We view these as building stronger franchise credibility, better Smart City orderbook quality and greater visibility of longer-tail recurring service revenues," says Jaiswal.
To reflect the orders and earnings momentum, he has raised his FY2026 earnings estimates by 2.5% and FY2028's by 7.2% to reflect stronger medium-term execution assumptions.
Jaiswal notes that even with this upgrade, his forecasts remain conservative relative to other analysts.
ST Engineering shares gained 1.11% to trade at $10.89 as at 9.47 am.
