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3 Interesting Facts about Singapore Technologies Engineering Ltd

Singapore Technologies Engineering Ltd (SGX: S63) is a local engineering group with a wide business reach as evidenced by its different business sectors: Aerospace, Electronics, Land Systems, and Marine

Formed in 1997, ST Engineering has grown over the years to become one of Asia’s largest defence and engineering groups. With a market capitalisation of S$9.5 billion today, ST Engineering is considered as a blue chip stock in Singapore due to its status as one of the constituents of the market barometer, the Straits Times Index (SGX: ^STI).

Let’s take a look at three interesting facts about the engineering conglomerate.

1. Strong defence capabilities

Some of the weapons and vehicles built by ST Engineering include the locally license-built Colt M-16S1Ultimax 100 SAW, Singapore Assault Rifle – 21st Century (or SAR21 for short), BIONIX Infantry Fighting VehicleTERREX 8×8 Armoured Personnel Carrier, and the BRONCO All Terrain Tracked Carrier.

Remarkably, ST Engineering’s products in the defence space are also used by other countries in the world. For instance, the Ultimax 100 SAW and SAR 21 weapons are utilised in countries such as Indonesia, Brunei, Peru, Morocco and Thailand.

2. A special one

If anyone or any company wants to own more than 15% of ST Engineering, “it would require seeking permission from the Minister of Finance, who owns one Special Share.”  The presence of the Special Share is probably to safeguard the national interests of Singapore.

The largest shareholder of ST Engineering currently is Temasek Holdings, one of the Singapore government’s investing arms. Temasek owns 51.3% of ST Engineering as of 2 March 2015.

3. Dividends galore

The engineering group has been paying annual dividends without fail since its formation in 1997. Those payouts, while having fluctuated at times, have also shown an unmistakable upward climb, rising from just 1.8 Singapore cents in 1997 to 15 cents in 2014.

ST Engineering's payout ratios

Source: S&P Capital IQ

The firm’s dividend payout ratio (dividends as a percentage of profit), including special dividends, has hovered around the 90% mark over the past few years, as you can see in the chart above.

This means that ST Engineering is paying out almost all of its earnings as dividends – there’s not much room for error for ST Engineering to play with when it comes to protecting its dividends. It’s something for investors to take note of.

At its current share price of S$3.05, ST Engineering is valued at 18 times its trailing earnings and has a dividend yield of 4.9% thanks to its payout of $0.15 per share in 2014.

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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 Sudhan P doesn’t own shares in any companies mentioned.