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Why Singapore Technologies Engineering Ltd (SGX:S63) Could Have A Place In Your Portfolio

Ashwin Virk

I’ve been keeping an eye on Singapore Technologies Engineering Ltd (SGX:S63) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe S63 has a lot to offer. Basically, it is a financially-sound company with an impressive history and an optimistic future outlook. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my high-level commentary, read the full report on Singapore Technologies Engineering here.

Flawless balance sheet with solid track record and pays a dividend

Over the past year, S63 has grown its earnings by 8.4%, with its most recent figure exceeding its annual average over the past five years. This strong performance generated a robust double-digit return on equity of 23%, which is an optimistic signal for the future.

SGX:S63 Future Profit December 24th 18

S63’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. S63 appears to have made good use of debt, producing operating cash levels of 2x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

SGX:S63 Historical Debt December 24th 18

Next Steps:

For Singapore Technologies Engineering, I’ve put together three key aspects you should look at:

  1. Valuation: What is S63 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether S63 is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does S63 return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from S63 as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of S63? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.