The conflict in the Middle East shows no signs of cooling down. However, with every risk comes an opportunity. This is where an established Singaporean engineering player comes in.

ST Engineering (STE) is the focus this week due to the new defense and public security contracts that it won in the Middle East, specifically Qatar, the UAE and Kuwait.

STE presents an interesting investment thesis and opportunity for investors who are eager to invest according to global trends and demand.

STE provides engineering solutions and products, and has three main businesses -  defense & public security (43% of revenue), commercial aerospace (CA, 40%), and urban solutions and satcom (USS, 16%).

As of 31 December 2025, STE has won SG$9.1 billion in contracts for its defense and public security (DPS) segment, exceeding contracts in commercial aerospace (SG$5.8 billion) and urban solutions (SG$3.9 billion). 

In 1Q 2026, it announced that it had obtained additional DPS contracts worth SG$2.4 billion. Notable ones include

STE is also actively expanding in the Middle East, as it has identified the region as having the highest addressable market at US$4.0 billion.

Financial growth has been solid. Revenue grew at an average annual growth rate of 12.6% from SG$7.7 billion in 2021 to SG$12.3 billion in 2025. Most of the growth was driven by its CA segment, growing at an average growth rate of 19.3% compared to the DPS (8.1%) and USS (3.5%) segments.

However, net profit has declined by 34% in 2025, due to the sale of businesses such as LeeBoy, CityCab, SPTel, and STARCO and also, substantial impairment losses from iDirect Group and Jet-Talk. 

STE’s order book has been growing at a strong rate. Based on its latest 2025 results, its order book is up by 16% to SG$33.2 billion. This is double the amount in 2021 (SG$17.5 billion).

With geopolitical tensions on the rise again in 2026, STE is well-positioned to supply defense and public security products and services to its international clients. It is targeting to grow the segment by 9% every year to reach SG$7.5 billion by 2029.

STE’s balance sheet is lighter now with its total borrowings reducing by 35% to SG$4.8 billion as of 31 December 2025. By divesting some of its businesses, STE has managed to reduce its debt and interest burden, with its Gross Debt/EBITDA margin declining by half from 5.2 times to 2.7 times. 

Analysts in the market have STE at an OVERWEIGHT call with an average target price of SG$11.5. It still has legs to run with an implied upside of about +7.9%.

STE is currently trading at lofty valuations with a price-to-earnings ratio (PER) of 72 times, while its price-to-book ratio stands at 13 times. However, this valuation could be justified considering that its earnings are projected to more than double to SG$1.0 billion in 2026 once the impairment losses rebound from the previous year. 

STE’s valuation isn’t considered too expensive if compared to global defense and aerospace companies. Here are their price-to-book ratios.

ST Engineering could be poised to benefit from the heightened geopolitical tensions in the Middle East region through its defense and public security segment. Its order book has grown at a strong rate throughout the years, and it is aiming to expand in the Middle East region.

Investors who are keen to invest based on the global defense trends could keep an eye out for this stock.30.