Singapore Technologies Engineering Ltd (SGX: S63) or ST Engineering is a conglomerate with business interest in various sectors.
Before investing in any company, it’s vital to understand how it makes its money. This will help investors get a quick overview of the company’s various sources of income.
Let’s look at it from three perspectives: by sector, customer type, and geography.
Source: ST Engineering’s Investor Factsheet
ST Engineering operates in four main sectors: aerospace, electronics, land systems, and marine.
Revenue is rather diversified across different sectors, as well as geographies. Also, the group has exposure to both commercial and defence customers. Such diversity positions the group well in the long term to deliver sustainable profit.
Another thing to note here is that with the exception of the marine and other segments, the remaining three segments delivered higher revenue in 2018.
Last but not least, the group’s revenue (though diversified) is highly concentrated in Asia (62%) as well as among its commercial customers (69%). It’s possible ST Engineering will increase this concentration even more in the future (for example, the Asia region delivered higher revenue while USA and Europe saw lower revenue in 2018).
There are a number of moving parts, here, but hopefully the above breakdown will help investors better understand ST Engineering’s business and its long-term prospects.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.
Motley Fool Singapore 2019