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Briefs: ST Engineering eyes revenue target of over $11 bil for FY2026; SPH shareholders likely to favour Cuscaden offer

The Edge Singapore
The Edge Singapore • 4 min read
Briefs: ST Engineering eyes revenue target of over $11 bil for FY2026; SPH shareholders likely to favour Cuscaden offer
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"I wish I did." — Alphabet CEO Sundar Pichai when asked if he holds any cryptocurrency.

SPH shareholders likely to favour Cuscaden Peak’s competing bid: analysts

Singapore Press Holdings (SPH) shareholders are likely to accept the competing offer from Cuscaden Peak, even though an earlier offer tabled by Keppel Corp offers more certainty of deal competition and payout as early as January next year, say analysts.

“We believe SPH shareholders will likely go for Cuscaden’s offer as this provides a higher total consideration value and value certainty,” says PhillipCapital analyst Terence Chua.

“Cuscaden’s offer also provides optionality to shareholders to participate in the future growth of SPH REIT or opt for an all-cash deal,” he adds.

Keppel has put forward a “final” offer of $2.351 per share in the combination of 86.8 cents cash and 0.596 Keppel REIT units and 0.782 SPH REIT units — up from $2.099 per share offered in August. Notably, Keppel is willing to offer 20 cents more cash per share.

Yet, Cuscaden Peak, a consortium led by hotelier Ong Beng Seng’s Hotel Properties, and two Temasek-linked entities, Mapletree Investments and CLA Real Estate Holdings, which holds CapitaLand, have put forward an all-cash offer of $2.36; or a mix of cash and SPH REIT units with a total value of $2.40.

CGS-CIMB Research analysts Lim Siew Khee, Eing Kar Mei and Lock Mun Yee, too, think SPH shareholders are likely to go for Cuscaden’s revised scheme.

“At $2.40 per share, the offer values SPH at $3.9 billion, or 1.1 times price-tonet asset value (P/NAV) which is a superior offer to Keppel’s revised scheme consideration,” write the CGS-CIMB analysts on Nov 15.

“Cuscaden’s scheme consideration will not be adjusted for SPH’s FY2021 final dividend of three cents per share or any break fee payable to Keppel,” they add.

The way the CGS-CIMB analysts see it, Keppel is still able to counter Cuscaden’s offer with a general offer, but the scenario is “unlikely”.

Cuscaden Peak has noted that SPH shareholders now need to first vote on the Keppel offer, before having another scheme meeting to vote on its offer. It is calling for the process to be streamlined into one meeting for SPH shareholders to decide on the two.

Keppel claims its revised offer was not triggered by a competing offer, but because SPH’s business has improved since its first offer was made. Following Cuscaden’s bid, Keppel would not be drawn into saying it will make another bid, other than that its final offer is a “compelling one and a win-win proposition”.

ST Engineering eyes FY2026 revenue target of more than $11 bil

ST Engineering has set a 2026 revenue target of more than $11 billion, as it goes about capturing new opportunities across the board in smart city projects, defence and aerospace contracts.

This growth target means the company’s annual revenue growth rate has to be at two to three times faster that of the global GDP. “And our net profits will grow in tandem with our revenue,” president and CEO Vincent Chong said at the company’s Investor Day on Nov 16.

For FY2020 ended Dec 2020, the company reported earnings of $521.8 million and revenue of $7.2 billion. For 1HFY2021 ended June 30, 2021, the company reported earnings of $296.1 million, up 15% y-o-y, on the back of a 2% growth in revenue to $3.65 billion.

To capture new growth, the company has in recent years made a string of significant acquisitions. Last month, it said it is offering US$2.7 billion to acquire TransCore, a traffic management business in the US. If and when completed, this will be ST Engineering’s largest acquisition ever.

Chong maintains that even with the hefty investments, the company’s balance sheet remains strong. “Our strong capacity for dividend payouts has been maintained,” says Chong, adding that the company’s return on equity level of 20% is also seen to continue.

The company recently announced its order book has hit a record $18.2 billion as at end-September.

Photo of ST Engineering CEO Vincent Chong: Albert Chua/The Edge Singapore

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