ST Engineering divests its stake in a Shanghai joint venture for approximately 124.6 million yuan | Lianhe Zaobao

ST Engineering has sold its entire 49% stake in Shanghai Technology Aerospace Co., Ltd. (STARCO) to China Eastern Airlines for approximately RMB 124.6 million.

Shanghai Technology Aerospace Co., Ltd. is a joint venture established by both parties in 2004, primarily operating factories in Shanghai Pudong and Hongqiao, providing aircraft maintenance, repair, and overhaul (MRO) services.

ST Engineering announced this news in a statement before the market opened on Monday (November 17).

ST Engineering pointed out that its wholly-owned subsidiary ST Engineering Aerospace will sell its original 49% stake in Shanghai Technology Aerospace for RMB 680.5 million (approximately SGD 124.6 million) to China Eastern Airlines.

After the transaction is completed, China Eastern Airlines, which originally held a 51% stake, will own 100% of the company. Both parties will also officially end this 21-year joint venture cooperation.

ST Engineering stated that after extending the agreement in 2024, both partners reached a consensus to terminate the cooperation relationship to focus on their respective development plans.

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ST Engineering's revenue increased by 9% to RMB 9.1 billion in the first nine months, plans to distribute a total of 11 cents per share as year-end and special dividends ST Engineering's new orders in the third quarter reached RMB 4.9 billion

The group stated: "This decision marks the end of a successful collaboration between the two parties, which has enhanced the business of both companies. ST Engineering highly values its close cooperation with China Eastern Airlines and looks forward to continuing to support China Eastern Airlines as an important customer in the future."

According to the statement, the sale will be paid in two installments, with the first installment of RMB 506.7 million payable upon completion of the transaction, and the remaining RMB 173.8 million to be paid no later than the end of 2026 Based on the book value of approximately CNY 60.2 million from Shanghai Aerospace Technology Company, this transaction will bring about CNY 48.1 million in one-time gains to ST Engineering.

In addition, the group expects to recover approximately CNY 116.3 million in net income, which will be used for debt repayment, saving about CNY 4.2 million in interest expenses each year. The announcement also stated that the sale is not expected to have a significant impact on this year's earnings per share and net asset value.

As of 9:40 AM, ST Engineering's stock price rose by 0.59%, trading at CNY 8.54