ST Engineering Earnings: Profit on Track, Aerospace Margin Miss Offset by Strong Defense

We think ST Engineering, or STE, is on track to meet our full-year 2024 expectation for respective 12% and 20% year-on-year growth in revenue and net profit. Stronger profitability in its defense & public security segment offset lagging commercial aerospace margins and continued satellite communications losses. Following slight adjustments to reflect the mix in segmental performance, our earnings estimates are largely unchanged and we retain our fair value estimate of SGD 4.72. Following the recent pullback in share prices, STE is now slightly undervalued. We think STE will continue to be in favor for its defensive attributes and stable dividends that currently yield 3.8%, particularly as global interest rates ease.