Singapore Technologies Engineering Ltd

S63: XSES (SGP)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	SGD 7.89	Qjdkfc	Ckschqsl

ST Engineering's Operating Outlook Is Improving, but High Debt Damps Earnings; FVE Reduced

Lorraine Tan

Feb 24, 2023

We lower our fair value estimate on narrow-moat ST Engineering, or STE, to SGD 4.60 from SGD 4.74 following its full-year 2022 results that revealed higher capital expenditures, debt, and amortization costs than we anticipated. We remain upbeat on the coming few years for its operating and free cash flow outlook on the airline industry recovery and particularly as loss-making projects and entities are divested or closed. STE trades on 4.5% dividend yield presently, and we think it may benefit from a pick up in investor interest once the federal-funds rate shows signs of peaking.

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