ST Engineering at all-time high after promising to raise dividends

Seatrium CEO's pay rises 126.4% after he leads the company to its first full-year profit in 7 years

- Kang Wan Chern

Shares of Singapore Technologies Engineering (ST Engineering) rose to an all-time high after the company revealed fresh five-year targets and plans to raise dividend payouts in 2025, as well as from 2026 if revenue and profits continue to rise.

The shares touched a record of $6.91 on March 20 before closing the week at $6.62.

At a company event on March 18, ST Engineering's chief executive Vincent Chong told investors and analysts that the company wants to be known as a yield-cum-growth stock, striking a balance between rewarding shareholders with better dividends and retaining sufficient earnings to expand the business.

He said the company is targeting revenue of $17 billion by 2029, with its defence and public security business contributing the most to that target. Its commercial aerospace business is also expected to expand.

ST Engineering's revenue for the 2024 financial year (FY) came in at a record $11.28 billion.

With better scale and better debt management resulting in lower interest payments, it is also aiming to grow its net profit at a faster pace than its revenue over the next five years.

Consequently, the company will propose an increase in its total dividend to 18 cents per share for FY2025, up from 17 cents in FY2024.

It also announced a new dividend policy from FY2026. As it achieves progressively higher full-year earnings, it will pay out about one-third of its year-on-year increase in net profit as incremental dividends.

The company, which had been charting a string of new record highs in recent weeks, is now among the top gainers on the Straits Times Index since the start of the year, with its share price up by more than 42 per cent during the period. Some analysts see more upside to the stock and have raised their target prices by as much as 30 per cent.

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