ST Engineering shares jump over 2% after company announces higher dividend policy

SINGAPORE: ST Engineering shares jumped 2.06% to S$6.45 before midday on Tuesday (March 18) after announcing a higher dividend policy before trading began. The stock reached an intra-day high of S$6.56 earlier in the morning.

According to The Edge Singapore, its shares opened 1.9% higher, or 12 cents up, at S$6.44 at the start of trading.

A pre-market bourse filing on Tuesday stated that ST Engineering plans to pay four cents per share for the first three quarters of FY2025 and a final dividend of six cents, totalling 18 cents.

ST Engineering has been paying four cents per quarter in recent years.

The company reported its FY2024 results on Feb 27, with earnings rising 19.7% year-on-year (YoY) and a full-year dividend of 17 cents, up from 16 cents the previous year. The FY2024 dividend will be reviewed at the company’s annual general meeting (AGM) on April 24.

The revised dividend policy for FY2025 will require shareholder approval at the 2026 AGM, set for April 2026. ST Engineering plans to grow full-year earnings steadily and pay about one-third of its annual net profit increase as incremental dividends starting from FY2026.

The Edge Singapore reported that from 2025 to 2029, the company plans to grow its revenue by 2.5 times the global GDP growth rate to $17 billion and aims for group net profit compound annual growth rate (CAGR) to be up to five percentage points higher than group revenue CAGR.

These targets are based on FY2024 figures, where ST Engineering posted S$11.3 billion in revenue, and the International Monetary Fund’s (IMF) forecast of 3.15% average global GDP growth over the next five years.

At ST Engineering’s investor day on March 18, group president and CEO Vincent Chong said the company plans to increase dividends as profits grow.

He also mentioned that the five-year targets do not factor in mergers, acquisitions, or divestments, as the targets are on a constant portfolio basis.

Group CFO Cedric Foo added that the company is confident of increasing revenue, operating cash flow, and net profit while improving shareholder returns by reinvesting for growth and rewarding shareholders with dividends.

ST Engineering shares have risen about 38% this year, driven by global interest in defence stocks and rearmament efforts in Europe. /TISG