ST Engineering CEO sees ‘uneven recovery’ after profit decline

• ST Engineering (SGX: S63) saw its shares drop by as much as 0.53% on Friday morning
• This came after the aerospace and electronics reported a full-year profit decline of 10% for 2020
• Group President & CEO Vincent Chong expects ‘recovery to be uneven’ as ‘the aviation industry remains subdued’ in 2021
• Trade ST Engineering, long or short, with an IG account

ST Engineering share price: what’s the latest?

ST Engineering’s share price fell 0.53% on Friday (19 February 2021) morning, after the company reported a 14% decline in net profit for the second half of 2020.

For its second half financial results ended 31 December 2020 (2H2020), the engineering group posted a revenue of S$3.6 billion, down 18% from S$4.4 billion a year ago.

Profit before tax was 32% lower at S$248 million from S$365.6 million the year before, while net profit was down 14% to S$264.4 million from S$308.6 million.

Full-year net profit down 10%

For the full 2020 financial year, group revenue came in 9% lower at S$7.2 billion, compared to S$7.9 billion a year ago in the same period. This is in line with the revenue guidance provided in the group’s third quarter market update.

Profit before tax dropped 23% year-on-year to S$534.4 million from S$695.2 million, while profit attributable to shareholders - net profit - was S$521.8 million, down 10% year-on-year from S$577.9 million.

In terms of contract wins, the company’s aerospace and electronics divisions announced new contracts of about S$5.7 billion in FY2020, of which over S$1.3 billion was secured in the last quarter of 2020.

The group’s order book totalled S$15.4 billion as at 31 December 2020, which is slightly higher than the order book at year-end 2019, despite the challenges brought about by Covid-19.

The group expects to deliver about $5.3b from the order book in 2021.

ST Engineering declares FY2020 dividend of S$0.15

The board of directors has proposed a final dividend of S$0.10 per share. Together with the interim dividend of S$0.05 per share distributed in September 2020, shareholders will receive a total dividend of S$0.15 per share for FY2020.

This translates to a dividend yield of 4%, computed using the average closing share price of the last trading day of 2020 and 2019.

The proposed payout is on par with the dividend sum and yield of the 2019 financial year.

Going into 2021, Group President & CEO Vincent Chong said he expects ‘recovery to be uneven across the industries we participate in’ as ‘the aviation industry remains subdued and is unlikely to recover to pre-pandemic levels in 2021’.

‘Nevertheless, we are focusing on delivering our order book, seizing new opportunities in areas like freighter conversions and cybersecurity. With partial revenue recovery, when combined with savings from our cost reduction initiatives, we target to offset the effects of lower government support in 2021,’ he added.

How to trade ST Engineering with IG

Are you feeling bullish or bearish on ST Engineering’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform, or by investing in the shares directly, in a few easy steps:

1. Create a live or demo IG Trading Account, or log in to your existing account
2. Enter <Singapore Technologies Engineering> in the search bar and select the instrument
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade