Published: 8 December 2025 – Singapore
Singapore Technologies Engineering Ltd (ST Engineering, SGX: S63) is closing 2025 with a paradox that investors know well: very strong operational momentum on one side, and a very large satellite-communications write‑down on the other.
The group has delivered solid revenue growth, a record order book, higher ordinary dividends plus a special payout – while simultaneously taking a S$667 million impairment on its iDirect satcom business and signalling a strategic reset in that segment. [1]
At the same time, ST Engineering is pushing hard into agentic AI‑driven cybersecurity and space technology, positioning itself as a key regional player in defence, smart cities and orbital infrastructure. [2]
Strong 9M2025 performance: revenue growth and record order book
For the nine months ended 30 September 2025 (9M2025), ST Engineering reported:
- Group revenue of S$9.1 billion, up 9% year‑on‑year, with growth across all three business segments: Commercial Aerospace (CA), Defence & Public Security (DPS), and Urban Solutions & Satcom (USS). [3]
- Third‑quarter revenue of S$3.1 billion, up 13% year‑on‑year, driven by 22% growth in CA, 5% in DPS and 15% in USS. [4]
- New contract wins of S$14.0 billion in 9M2025, including S$4.9 billion in 3Q2025 alone. [5]
- A record order book of S$32.6 billion as at end‑September 2025, with about S$2.8 billion scheduled for delivery in the remainder of 2025, giving strong near‑term revenue visibility. [6]
The step‑up in 9M performance builds on an already robust first half. In 1H2025, ST Engineering generated S$5.92 billion of revenue, up 7% year‑on‑year, and net profit of S$403 million, also 20% higher than a year earlier. Earnings before interest and tax grew 15% to S$602 million, while profit before tax rose 20% to S$500 million. [7]
Segment details underline a broad‑based recovery:
- Commercial Aerospace revenue in 1H2025 rose 5% to S$2.35 billion, with higher engine MRO and nacelles activity offsetting weaker passenger‑to‑freighter (PTF) conversion revenue. EBIT grew 18%, helped by better margins and cost savings. [8]
- Defence & Public Security revenue increased 12% to S$2.65 billion, with EBIT up 13%, supported by growth across land, air, sea and digital defence. [9]
- Urban Solutions & Satcom revenue was broadly flat at S$921 million, as higher urban solutions work offset a weaker satcom contribution, but EBIT still improved from S$9 million to S$12 million due to mix and efficiencies. [10]
Analysts noted that defence contract wins have accelerated sharply: CGS International estimates defence‑related wins reached S$6.6 billion for 9M2025, up 84% year‑on‑year, with international defence orders already exceeding full‑year 2024 levels. [11]
Portfolio reshaping and shareholder returns: divestments fund a “triple” dividend
Alongside organic growth, 2025 has been a year of active portfolio reshaping. ST Engineering has exited several non‑core or lower‑priority assets, using the resulting cash to strengthen its balance sheet and return capital to shareholders.
Key moves include the divestment of:
- LeeBoy (road construction equipment manufacturer)
- CityCab (taxi operator)
- SPTel (telecoms joint venture) – whose sale completion was announced on 10 November 2025 [12]
These three deals generated S$594 million in cash proceeds and S$258 million of post‑tax divestment gains, according to the group’s 3Q2025 market update. [13]
On 12 November 2025, ST Engineering paired its 9M2025 update with a “triple dividend” announcement: [14]
- A 3Q2025 interim dividend of 4.0 cents per share, paid on 5 December 2025
- A proposed final dividend of 6.0 cents per share for FY2025
- A proposed special dividend of 5.0 cents per share, explicitly linked to the cash realised from recent divestments
If shareholders approve the final and special dividends at the 2026 AGM, total FY2025 dividends will reach 23.0 cents per share. [15]
Dividend‑focused commentators have framed the move as a signal of management confidence: Simply Wall St highlighted that the three payouts underscore ST Engineering’s “emphasis on rewarding shareholders,” while local blogs such as Beansprout estimate that, even after the special dividend, the FY2025 dividend yield is only around 2.6–2.8%, due to the strong share‑price rally over the past year. [16]
Despite this capital return, ST Engineering stresses that it remains financially strong, with management reiterating its ability to reinvest in growth and reduce debt while retaining robust credit ratings. [17]
Optimising the aerospace footprint: exit from Shanghai’s Starco
In a separate portfolio move, ST Engineering is selling its 49% stake in Shanghai Technologies Aerospace Company (Starco), an airframe MRO joint venture, to partner China Eastern Airlines for 680.5 million yuan (about S$124 million) in cash. [18]
The deal is expected to:
- Generate a one‑off gain of roughly S$48.1 million, based on Starco’s carrying value
- Yield net proceeds of about S$116.3 million, which ST Engineering plans to use to pay down debt
- Save approximately S$4.2 million in annual interest expenses after deleveraging [19]
Management frames the exit as part of a broader MRO network rationalisation. ST Engineering has been building out newer and larger facilities in Guangzhou and Xiamen, and recently opened an airframe MRO centre in Ezhou, Hubei, with a second hangar under construction. Even after the Starco exit, the group says its total MRO capacity in China and elsewhere remains above pre‑COVID levels, ensuring it can meet customer demand. [20]
Satellite communications reset: S$667 million impairment on iDirect
The brightest numbers of 2025 sit beside one very dark one: a S$667 million non‑cash impairment on ST Engineering’s satcom subsidiary, iDirect Group, plus a further S$22 million impairment on JetTalk, another satcom‑related business. Total impairments of S$689 million are partially offset by the S$258 million divestment gains, leaving a net negative impact of about S$431 million on the group’s 2025 profit. [21]
The impairment reflects a much tougher outlook for GEO‑satellite ground infrastructure amid:
- Rapid expansion of Non‑Geostationary Satellite Orbit (NGSO) constellations such as Starlink and Amazon’s Kuiper
- Consolidation among traditional satellite operators
- Slower‑than‑expected uptake of iDirect’s new Intuition platform and weaker customer orders [22]
According to analysts cited in The Business Times, iDirect’s revenue fell about 9% year‑on‑year in 9M2025, with EBITDA down roughly 22%, highlighting persistent profit pressure. [23]
There are, however, two mitigating factors:
- Depreciation and amortisation savings
The write‑down is expected to cut depreciation and amortisation by about S$50 million per year, which should support a visible improvement in the Urban Solutions & Satcom segment’s margins from 2026 onward. [24] - Strategic options on the table
CGS International notes that management is conducting “ongoing active discussions” on the future of iDirect, including the possibility of a full divestment. The broker believes a sale could eventually lift Urban Solutions & Satcom EBIT margins above 5% by FY2027, though any deal would depend on market conditions. [25]
Morningstar takes a more cautious view, describing satcom as the weakest part of ST Engineering’s portfolio and forecasting stagnant revenue and continued losses from this activity, even after the impairment. Still, its analyst argues that the write‑down was “not entirely unexpected” and that the underlying performance of other core businesses should allow the market to look past the one‑off charge. [26]
Cybersecurity and agentic AI: a new growth pillar
While satcom gets reset, ST Engineering is building a fresh growth pillar in cybersecurity and artificial intelligence.
On 21 October 2025, the company announced the creation of a Cybersecurity Centre of Excellence (CoE) in Singapore to accelerate the development of agentic AI‑driven cyber solutions. The CoE is supported by Digital Industry Singapore and the Cyber Security Agency of Singapore. [27]
Key features of the initiative:
- The CoE will initially employ 26 specialists, scaling up to an 81‑strong team over three years focused on AI, 5G, operational technology (OT) cybersecurity, threat response and security testing. [28]
- It aims to extend ST Engineering’s experience in running Security Operations Centres for critical infrastructure, using agentic AI to automate threat detection, digital forensics and incident response. [29]
- The centre will also act as a talent pipeline, operating dedicated labs and training programmes with institutions such as Republic Polytechnic and Singapore Polytechnic. Students will be trained on in‑house agentic AI tools so they can operate effectively in AI‑assisted cybersecurity environments. [30]
Agentic AI – systems that can autonomously analyse context, make recommendations and take actions within defined guardrails – is central to ST Engineering’s cyber roadmap. Its solutions portfolio already includes offerings such as an Agentic AI SOC and AGIL SecureAI, designed to harden both IT and OT networks as well as AI and generative‑AI systems themselves. [31]
Given the surge in global cyber risk, the CoE positions ST Engineering as both a technology provider and workforce trainer for governments and large enterprises in Southeast Asia and beyond.
Broad contract momentum across aerospace, defence, smart mobility and space
The record order book is underpinned by a wave of large, multi‑year contracts across the group’s key segments.
Q3 2025: S$4.9 billion of new wins
In its October announcement, ST Engineering reported that 3Q2025 contract wins reached S$4.9 billion, split as follows: [32]
- S$1.4 billion – Commercial Aerospace
- Multi‑year airframe heavy maintenance and cabin modification contract for the Airbus A380 with a European airline
- Continued strong demand for engine and component MRO
- Robust orders for engine nacelles and composite floor panels, backed by rising production of new aircraft
- Additional A330 passenger‑to‑freighter conversion orders
- S$2.4 billion – Defence & Public Security
- Digital Systems & Cyber contracts, including Earth‑observation satellite systems for an international customer, AI‑powered 5G edge solutions, data‑centre services and advanced cybersecurity systems
- Orders for next‑generation broadband communications and commercial satellite imagery and analytics services
- Land Systems wins, such as first‑time 155mm ammunition contracts in South America, new ammunition orders from Eastern Europe, repeat 40mm ammunition orders from international customers and sales of hybrid electric 4×4 protected vehicles in Asia
- Defence Aerospace contracts for military aircraft MRO
- S$1.1 billion – Urban Solutions & Satcom
- Smart‑mobility wins including rail electronics for Singapore’s Thomson–East Coast Line extension and long‑term support for systems on the Jurong Region Line
- Next‑generation intelligent transport systems in Singapore and tolling contracts in the US
- Digital‑health deals such as Doctor‑on‑Call ICT solutions for hospitals in Hong Kong
- Integrated smart security management for customers in Singapore
- Satcom ground‑segment infrastructure contracts for government and commercial operators in Asia, Europe, the Middle East and the US
Space and training technology: SAR satellites and SAFTI City
Looking beyond Earth’s surface, ST Engineering is also deepening its role in space and advanced defence training:
- In November 2025, the company was selected by FADA (part of the UAE’s EDGE Group) to supply a synthetic aperture radar (SAR) satellite and associated mission control infrastructure for the UAE’s Sirb National SAR Constellation Programme. The satellite will offer sub‑metre resolution and high‑speed downlinks for applications including disaster response, environmental monitoring and national security. [33]
- On 2 December 2025, ST Engineering won the Defence Technology Prize 2025 (Engineering Award) for its work on SAFTI City, a 100,000‑square‑metre smart military training facility in Singapore. The company delivered the simulation backbone and the Mission Analytics and Review System (MARS), which uses data analytics to give evidence‑based feedback on training performance. [34]
These wins underline how ST Engineering’s space, simulation and digital‑defence capabilities are increasingly intertwined – and how they support both domestic and export‑driven growth.
Share price, valuation and analyst forecasts
Market performance and dividend yield
As of 5 December 2025, ST Engineering’s share price stood around S$8.17–S$8.18 per share on the Singapore Exchange, according to Morningstar and MarketScreener data, reflecting a gain of more than 70% since the start of the year. [35]
If shareholders approve the proposed final and special dividends, the total FY2025 dividend of 23.0 cents per share translates into a forward yield of roughly 2.6–2.8% at recent prices – well below the 4–5% range at which the stock historically traded, a point noted by Morningstar and local income‑investing sites. [36]
Analyst targets and consensus view
There is no single view on valuation, but the weight of recent broker commentary is cautiously positive:
- CGS International has upgraded the stock from Hold to Add, raising its target price to S$9.50, citing strong defence order momentum and the potential value unlock from strategic options around iDirect. [37]
- Morningstar maintains a fair value estimate of S$8.10 with a “narrow moat” rating, arguing that the share price is close to fair value after this year’s rally, and highlighting satcom as a structural weak spot within the portfolio. [38]
- Consensus estimates compiled by services such as Investing.com and GrowthInvesting show:
- Around 15 analysts covering the stock
- A consensus 12‑month price target near S$8.8–S$8.9, with high and low estimates of about S$10.50 and S$6.70 respectively [39]
- A recommendation mix that leans towards Buy, but with a material number of Hold ratings and a small number of Sells
Taken together, the street generally sees modest upside from current levels, with the stock no longer trading at “bargain” valuations but still underpinned by resilient earnings and a visible order book.
Growth forecasts
Forward‑looking models based on consensus data indicate that analysts expect:
- Earnings to grow about 15.7% per year over the next few years, materially faster than the estimated 7.6% per year for the overall Singapore market
- Revenue to grow around 8.1% per year, versus roughly 4% for the market
- Return on equity to rise towards 34.3% within three years, reflecting improving margins and capital efficiency if the order book is executed as planned [40]
These forecasts, compiled by Simply Wall St from S&P Global estimates, depend heavily on sustained defence demand, continued aerospace recovery, and successful containment – or exit – of satcom losses.
Key themes and risks to watch in 2026
Looking into 2026, several themes will likely drive how investors, customers and policymakers read ST Engineering’s story.
- Defence orders converting into revenue
The sharp rise in international defence contract wins – especially for land systems, naval shipbuilding and digital defence – needs to translate into timely execution and sustained margins. Potential contracts for the Bronco and Terrex 8×8 platforms in Europe and the Middle East, and strong inquiries for naval shipbuilding and land‑platform MRO in the Middle East and Eastern Europe, are important watchpoints. [41] - Aerospace cycle and PTF constraints
While engine MRO demand is strong, management and Morningstar warn that feedstock for passenger‑to‑freighter conversions is likely to remain tight until around 2027, as airlines hold onto older aircraft longer. Execution in higher‑margin engine MRO and nacelles will have to compensate for this constraint. [42] - Outcome of the iDirect strategic review
Whether ST Engineering chooses to restructure, partner or divest iDirect will affect not only short‑term earnings volatility but also the long‑term strategic shape of the Urban Solutions & Satcom segment. Analysts will watch for clarity within the “three to six months” time frame suggested by CGS International. [43] - Scaling cybersecurity and agentic AI profitably
The Cybersecurity CoE, Agentic AI SOC and AGIL SecureAI platforms open up significant opportunities – but also require sustained R&D and talent investment. The key question is whether these solutions can be monetised at scale with government and commercial customers across ASEAN, the Middle East and beyond. [44] - Capital allocation: special dividends vs reinvestment
With S$594 million in recent divestment proceeds already partly committed to a special dividend and debt reduction, markets will pay close attention to how management balances further portfolio optimisation, organic investment (for example, in MRO expansions and space projects) and any future special payouts. [45] - Macro and geopolitical backdrop
ST Engineering’s fortunes are tightly linked to global aviation trends, defence budgets, and infrastructure spending. Persistently high interest rates, currency swings or a sharp slowdown in air travel would pose obvious headwinds, while increased defence and space spending in Europe, the Middle East and Asia could reinforce current growth trajectories.
Conclusion: a cleaner base, a heavier backlog
By early December 2025, ST Engineering looks like a company that has chosen to “rip the band‑aid off” on a problematic business line while doubling down on its strongest franchises.
On one side, it has:
- Solid double‑digit profit growth in 1H2025
- 9% revenue growth and a record S$32.6 billion order book in 9M2025
- A growing presence in cybersecurity, AI, smart mobility and space
- A larger‑than‑usual 23‑cent total dividend, including a special payout funded by divestments
On the other, it has:
- A S$667 million impairment on iDirect
- Ongoing challenges in satcom, a business where structural headwinds may persist even after the write‑down
For now, the consensus view appears to be that the core engines of ST Engineering – commercial aerospace, defence & public security, and urban solutions – remain intact and growing, while the satcom reset clears the decks for a cleaner 2026–2027 profit trajectory.
Whether the stock continues to outperform from here will likely depend less on headline impairments and more on the boring but critical work of turning that record order book, cyber and space ambitions, and AI‑enabled capabilities into durable cash flows.
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