Bring it on: ST Engineering braces itself for $300m capex

It eyes adding 4-5 units per year in its aircraft leasing arm.

After posting a slight decrease in its profit before tax (PBT) the recent quarter compared to last year, Singapore Technologies Engineering Ltd. (STE) is ready to do all that it takes to keep their business at the top of its game.

According to a report by UOB Kay Hian, STE is already geared up to brace higher capex of $300 million as it invests in its passenger-to-freighter (PTF) business, as well as its aircraft leasing businesses and further inroads for Terrex carriers.

“STE holds the exclusive intellectual property (IP) for the A330 and A320 PTF conversions and expects the four A330 PTF conversions for DHL to eventually lead to more work,” the report said.

More so, the group deemed that its plan to add 4-5 units per year to their aircraft leasing business would eventually boost profitability of the segment.

It added, “STE also showcased the amphibious personnel carrier Terrex at Farnborough. STE is currently in the process of showcasing a variant of the Terrex to the British Royal Navy, the report said,"

Meanwhile, it is also looking forward to the thrive in its electronic sector.

STE's electronics division has seen the highest growth for the group in the past years. Although it contributes only 30% of the group's PBT, it is expected to overtake its aerospace division in the next five years.

"STE highlighted its enhanced capabilities, particularly in machine-to-machine
(M2M) connectivity and solutions, cyber security, as well as its equatorial satellite. STE guided it has begun commercial sales of its satellite products, which were well received. STE intends to build more satellites in the coming years," the report said.

For the half year, the electronics segment revenue boosted 17% to $902 million, with its PBT spiking up 11% to $90.8 million.