“Strong contract win momentum is expected to continue, as management is actively pursuing US$11 billion [$14 billion] worth of international defence contracts and $6 billion worth of smart mobility projects in the next two years,” says Roy Chen of UOB Kay Hian (UOBKH).
However, there is a sense that the company’s management is walking a narrow line between sounding upbeat and being careful. When the company announced its full-year results in February, it expressed confidence that it would be able to double overseas defence sales this year compared with the previous year, which, in turn, had already doubled over FY2024. In FY2025, the company recorded international defence sales of $600 million, indicating it is targeting $1.2 billion this year.
With two recent big wins, the $470 million MRO contract from Qatar and a $600 million order to build missile gunboats for Kuwait, ST Engineering is already more than halfway across this $1.2 million forecast.
At the most recent 1QFY2026 business update briefing on May 18, Mervyn Tan, who heads up ST Engineering’s defence & public security business, did not revise this projection further.
Tan points out that these two wins came from the back of a pipeline built over time, not from immediate quarter-by-quarter decisions. By the very nature of such big-ticket spending, the procurement cycles and processes involved are necessarily longer and more varied, with multiple approvals required along the way before fruition.
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As such, while eyeing further orders, the company prefers to report on significant, tangible wins rather than issue new forecasts. Nonetheless, ST Engineering has to lay out a broad range of potential project wins. For land systems, it is in the running to supply various types of fighting vehicles, including the 8-by-8 infantry fighting vehicle already in use by Singapore across multiple iterations, and the Bronco tracked utility vehicle previously sold to the British Army.
Potential buyers include those from Italy, Finland, Austria, Canada, and unnamed countries in the Middle East and Eastern Europe. The company is also in the running to sell frigates to Thailand’s navy in a deal potentially worth US$530 million. If so, this will make this a repeat customer, as ST Engineering sold an Endurance-class landing platform dock in 2012. “We go into markets where our proven competencies and products will likely compete well,” says Tan. “These are tangible opportunities that we are working very hard to fulfil. They are pretty specific pipelines of opportunities,” adds CEO Vincent Chong.
In any case, analysts, many of whom have spent the better part of last year revising their target prices upwards in a bid to chase after this stock, have maintained their bullish calls.
UOBKH’s Chen, for one, has raised his core earnings forecast by 1-7% in FY2026–FY2028, suggesting 17.6% in core earnings CAGR over these three years. From an earlier target price of $10.86, Chen now estimates this stock is worth $11.75, based on 30 times FY2027 earnings.
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Krishna Guha of Maybank Securities has maintained his “buy” call and $12.50 price target. He notes that the 1QFY2026 trajectories are tracking his full-year estimates. As such, he is leaving his sum-of-the-parts target price unchanged. “ST Engineering provides strong earnings visibility and exposure to structural growth drivers such as defence, urban solutions and AI adoption,” he adds.
Shekhar Jaiswal of RHB Bank Singapore is similarly bullish. “Our outlook remains upbeat, as the Middle East conflict’s direct financial impact is not material, while ST Engineering’s diversified portfolio, international defence business momentum and multi‑year aviation Maintenance, Repair and Operations (MRO) demand runway underpins its resilience,” says Jaiswal, whose target price is $12.30.
Of course, the company is not just about arms sales. Paul Chew of PhillipCapital points out that ST Engineering has several “growth runways” besides international defence contracts. He notes that the company’s commercial aerospace segment is doubling its MRO capacity in Singapore to capture the expected growth. In addition, the company is eyeing some $6 billion in smart mobility projects over the next two years as urban populations grow, says Chew, who has kept his “buy” call and $13 target price.
