ST Engineering is poised for significant growth as it capitalises on increased international procurement and the rising urgency for Smart City solutions, according to DBS Group Research.
The company, which has been laying the groundwork through marketing, research and development, and strategic partnerships, is now seeing these efforts bear fruit. The anticipated growth has led to a reassessment of its valuation, with a target price increase to SGD7.50.
The defence sector is expected to experience an upside surprise due to surging international procurement, which aligns with years of groundwork laid by ST Engineering. Additionally, the urgency to adopt Smart City technologies is expected to accelerate, potentially exceeding medium-term targets.
The company is also exploring potential mergers and acquisitions, supported by a strong execution track record and robust balance sheet capacity. This strategic move is expected to provide additional momentum to its growth.
ST Engineering’s historical valuation benchmarks are now considered inadequate to reflect its higher growth trajectory. The company is trading at a notable price-to-earnings growth (PEG) discount, and its earnings visibility justifies the target price raise.
In summary, ST Engineering is entering a new era of growth, driven by international demand and strategic initiatives. This growth is prompting a valuation rethink, positioning the company for a promising future.
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