ST Engineering's Outlook Remains Positive on MRO Tailwinds, Improving Efficiency

Singapore Technologies Engineering is driving growth through improved utilization of its capital alongside a plan to contain costs. It has sold and continues to offload noncore activities to focus on areas that will provide synergies to its key aircraft maintenance and smart city activities. In this regard, it is adding proprietary product makers to its stable. Overall, we see STE’s EPS growing a five-year compound annual growth rate of 15%, marking an improvement over the 2.7% prepandemic 10-year average, which reflects the pandemic recovery as well as the purchase of U.S. toll road services provider TransCore and an expansion of its passenger-to-freight, or P2F, activities. The latter will help drive earnings growth after 2024.