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A Quick Review Of Singapore Technologies Engineering Ltd’s Electronics Business Performance

Singapore Technologies Engineering Ltd (SGX: S63), or STE in short, is a conglomerate with business interests in various sectors, namely Aerospace, Electronics, Land Systems, Marine and others.

Given the complexity of this business, it may be useful that investors take a separate look at each of the business segments within the company.

In this article, we will do a quick review of the Electronics business segment’s performance in two slides.

Revenue and profit before tax

Source: STE Q2 2017 Result Presentation

From the above, we can see that all three divisions within the Electronics segment grew quarterly revenue on a year-on-year basis. This was largely due to the modification of estimates of revenue recognition for long-term contracts from milestone completion per customer acceptance to monthly work done.

Despite the growth in revenue by 40% year-on-year, profit before tax grew only 2% during the period. This was mainly due to less favorable sales mix and lower other income.

Revenue by location of customers

Source: STE Q2 2017 Result Presentation

The above is a quick summary of the geographical revenue source for STE’s Electronics business.

What’s useful to note is that the majority of income came from Asia, reflecting a concentrated income based.

Conclusion

Overall, the Electronics segment delivered revenue growth, which was largely due to modification of estimates of revenue recognition for long-term contracts.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.