How Does Singapore Technologies Engineering Ltd Make Money?

It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business Singapore Technologies Engineering Ltd (SGX: S63), or ST Engineering, is involved in and how it generates revenue.

ST Engineering, as a quick background, is an integrated defence and engineering group that has capabilities in the aerospace, electronics, land systems and marine sectors.

Let’s take a look at the table below for the revenue contribution of each segment for the financial year ended 31 December 2016 (FY2016):

Source: Singapore Technologies Engineering Ltd Annual Report 2016

Revenue from the Aerospace segment, which made up around 37% of the firm’s total revenue in FY2016, was S$2.48 million.

Under this business segment, ST Engineering provides airframe, engine and component maintenance, repair and overhaul (MRO), engineering design and development, technical services, material support, asset management services and pilot training.

Moving on, the Electronics segment clocked in a revenue of S$1.88 billion. This segment contributed to 28% of total sales.

The division is involved in the design, development and integration of advanced electronics and communications systems. These systems include broadband radio frequency and satellite communication, e-Government solutions, rail and traffic management, and so on.

Next, the Land Systems segment, which raked in S$1.31 billion of revenue, provides design and engineering services, manufacturing of military and commercial vehicles, automotive subsystems, armament, weapons, weapon systems, ammunition and explosives.

Furthermore, it offers MRO services for vehicles and weapon systems.

For FY2016, this business division launched the Terrex 3 infantry fighting vehicle and delivered the final prototype of the next-generation Armoured Fighting Vehicle to the Singapore Armed Forces.

Next, the Marine segment provides shipbuilding, ship repair and ship conversion services for a broad range of naval and commercial vessels.

Last but not the least, the Others segment is involved in research and development, treasury, and investment holding, among others.

As a whole, commercial customers contributed to 65% of total revenue while defence customers pitched in the rest.

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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.