Cost cutting is no longer an option for struggling ST Engineering, say analysts

It needs all resources to support its electronics segment.

The rich potential of its electronics segment is the main thing keeping the integrated engineering firm from getting devoured by cyclical pressures.

However, to keep its electronics segment afloat, analysts say ST Engineering can’t afford to skimp on costs.

According to analysts from UOB Kay Hian, a large part of STE’s cost base is fixed, given that its engineers is deemed to the long-term growth of the firm.

“The electronics segment appears to be the only segment that has less cyclical pressure and it has several new capabilities which are likely to grow over the next 2-3 years, especially in relation to Singapore’s smart nation initiative,” UOB Kay Hian added.