Singapore Technologies Engineering Ltd (S63) Earnings Call Transcript & Summary

Good morning. Welcome to ST Engineering's Full Year 2025 Results Briefing. We will begin with a presentation by our Group CFO, Cedric Foo; our Group President and CEO, Vincent Chong, will then give his remarks. After that, we will end today's session with a Q&A from the analysts. Without further ado, may I invite Cedric to give his presentation, please.

Yes. Thank you. First of all, welcome to ST Engineering's Full Year 2025 Results Briefing. Good morning to all participants, whether you are in person here or via the webcast. Slide 2. Before I begin, I would like to bring your attention to Slide #2, which states, amongst others, that the group's actual performance, outcomes and results in the future may differ materially from those expressed in forward-looking statements herein. Slide 3. This is our agenda for today. I'm very pleased to present our '25 full year results covering the following topics: group highlights, business segment discussions, portfolio management, productivity, contract wins and order book, debt, dividends and outlook. Group highlights. Slide #5. In the second half of 2025, we continue to streamline our portfolio with 4 significant divestments. We also recorded noncash impairments relating to our Satcom business. These actions with the one-off effects affected our reported financial statements and distorted the group's underlying base operating performance. To enable our stakeholders to better assess the financial performance underlying our continuing businesses, we will be using the term BOP, or base operating performance, throughout this presentation. Some of you call it by other names like clean or underlying, but it means the same thing, or non-GAAP. On a BOP basis, we delivered an excellent set of results for 2025. Here are some highlights. Revenue reached $12.3 billion. BOP net profit surged to $851 million. This translates to year-on-year growth rates of 9% and 21%, respectively. We also achieved contract wins of $18.7 billion, which is 49% higher year-on-year, lifting our order book to $33.2 billion or 16% higher year-on-year. During the year, we recognized one-off noncash impairment of $689 million, partially offset by divestment gains of $301 million. These figures were reflected in the reported P&L statements. Importantly, the group generated strong cash flow, $1.7 billion from operations and about $700 million from divestments. These cash resources enabled us to, firstly, return value to shareholders via the special dividend as recommended by the Board; secondly, pay down debt to $4.8 billion; and thirdly, reinvest in our growth. Informatively, our return on equity for 2025 is 28-plus percent. Slide 6. This slide shows the reported P&L, and I will not dwell too much because of the distortions from one-offs. At the revenue level, unchanged from base operating performance, with second half '25 revenue up 12% on the left and full year '25 up 9% on your right. Reported EBITDA, EBIT, PBT and net profit are lower year-on-year, primarily due to one-off items recorded during the year, such as impairment losses and divestment gains. And these impairment losses do hit many lines of the P&L, except revenue. Nevertheless, we are pleased to report a positive second half '25 net profit after taking in all the one-off effects of 2 half '25 as we have guided. Slide 7. Now this slide shows base operating performance or BOP. On a BOP basis, 2025 was a very strong year, which reflected the strength and resilience of our underlying businesses. For the second half of 2025, which is on the left, the group achieved very strong growth, 12% growth in revenue, 9% growth in EBITDA, 16% growth in EBIT, 21% growth in PBT and 22% growth in net profit. For second half 2025 growth over first half, which is not shown here, which is a half-on-half, second half '25 versus first half '25, net profit was $448 million or 11% higher than first half '25 of $403 million. This represents good trajectory going into 2026. In other words, the second half is -- have higher and better numbers than first half. For the full year 2025, the group also performed very well, 9% growth in revenue, which crossed the $12 billion mark for the first time, 10% growth in EBITDA, 16% growth in EBIT, 20% growth in PBT and 21% growth in net profit. As the year-on-year revenue growth rate for second half 2025 was 12%, as you can see in the slide, and higher than the 9% growth for the full year 2025, as you can see on your right, the operating momentum is indeed very strong. Slide #8, revenue by segment. On the left, the pie chart shows the revenue breakdown by segment for 2025. 40% was contributed by Commercial Aerospace, CA in short; 43% was contributed by Defense and Public Security, DPS in short; and 16% was contributed by Urban Solutions and Satcom, or USS. DPS as a segment includes both local and international customers. It also covers commercial domains, including public security, safety, critical infrastructure and others. Hence, DPS as a segment has a revenue of $5.3 billion in 2025 on the left, is different from the revenue derived from defense products and solutions, which is in the middle of the chart of $3.8 billion. So in other words, the $3.8 billion is a subset of the $5.3 billion. Revenue by type in the center, it shows revenue for the past 2 years. Commercial revenue increased from $7.8 billion to $8.6 billion. Defense revenue increased from $3.5 billion to $3.8 billion. On the right-hand side, revenue by customer location. The table shows revenue by customer location. Asia contributed 55%. It went up. U.S. down 19%, partly because of Leeboy, MAE and lower PTF in the U.S. Europe 20%, and others 6%. Slide #9. This slide shows the year-on-year increase in group revenue by segment. In 2025, our revenue grew from $11.3 billion to $12.3 billion, an increase of 9%, contributed by all segments. If not for the weaker U.S. dollar average rate in '25 versus '24, the group revenue would have grown more than 9%. It would have grown by 10% year-on-year. Now from another perspective, on a rebased basis, if we exclude Leeboy revenue, which was divested in September last year, from both the 2025 Leeboy's revenue and 2024 Leeboy revenue, we just rebased everything, our underlying continuing businesses would have grown by 11% instead of 9%. Slide #10. This slide shows BOP EBIT. EBIT grew 16% year-on-year on a BOP basis, driven by effective execution, business growth and cost savings across the group. After accounting for one-off items during the year, reported EBIT is lower. This -- these items relate to portfolio actions taken in 2025. On a rebased BOP basis, if we exclude EBIT of Leeboy and our share of [indiscernible], both these companies were divested, for both years, '25 and '24, the underlying businesses grew 18% year-on-year. Slide 11, net profit. On a BOP basis, net profit grew 21% year-on-year to $851 million. On a rebased BOP basis, again, excluding the net profit from Leeboy and share of [indiscernible], the underlying businesses grew 24% year-on-year, that almost 1/4. Next, we move on to discuss business segment. Slide 13. For CA, revenue grew 14% to $5 billion. I think Jeff is very proud of hitting that $5 billion, very close, but really almost there. This growth was contributed by stronger sales from engines, MRO and [indiscernible]. In terms of contract wins, CA secured $5.8 billion, and this is on your right, of new contracts in 2025, of which $1.7 billion was secured in the fourth quarter alone. You will notice that the contract wins exceed the revenue drawdown from the order book, which is a good sign. Slide 14, Commercial Aerospace EBIT. On a BOP basis, EBIT for CA grew 22%, very strong, to $487 million, outpacing the revenue growth we talked about of 14%. So revenue grew 14%, but BOP EBIT 22%. So clearly, this is driven by higher margins. On a reported basis, EBIT for CA was $542 million. This is the last bar on the chart, and that includes the divestment gain on STACO of $56 million. Next, DPS, Slide 15. For DPS, revenue grew 8% to $5.3 billion. On a rebased basis, revenue grew 11%. The growth was contributed by all subsegments. In terms of contract wins, DPS secured $9.1 billion new contracts, very large number, in 2025, of which $2.5 billion was signed in the fourth quarter 2025, reflecting continued demand from both domestic and international customers. Again, I want to highlight the contract wins of $9.1 billion far exceeds the revenue drawdown from order book for this period of $5.3 billion. So very, very healthy, more than replacement rate. The Qatar MRO contract, which we just announced this morning, to maintain different fleets of land platforms for the Qatar Emiri land forces is a very significant win for us. Why? Because in addition to the contract value of $470 million, this contract demonstrates the trust and confidence placed in us to maintain the operational readiness of critical land assets of an international military organization. So from that perspective, it is a breakthrough, and we hope this will lead to even more successes. And such MRO revenues are also recurring in nature, which is helpful. Notably, our international defense contract wins have also doubled year-on-year, underscoring the growing contribution from overseas markets. We continue to work on many international defense projects, and there are many irons in the fire. We target to double international defense contract wins in 2026 year-on-year. We hope to do better than that. Slide 16, Defense and Public Security EBIT. On a BOP basis, EBIT for DPS grew 14% year-on-year to $725 million, outpacing revenue growth again. This is driven by strong business growth and higher margins, so Commercial Aerospace, higher margins, DPS higher margins, 2 of our largest segments. On a rebased BOP basis, if we exclude the EBIT of LeeBoy and share of CityCAP, the underlying segment EBIT grew 18% year-on-year. On a reported basis, EBIT for DPS was $919 million, including the divestment gains for LeeBoy and CityCap net of impairment loss in [indiscernible]. Now the third segment, Slide 17, USS, Urban Solutions and Satcom. For USS, revenue grew 4% to $2 billion. The growth was contributed by URS, which is our URS mobility, rail and TransCore, partially offset by Satcom. URS performance was supported by steady project deliveries across railroad and Smart Mobility solutions. This pace of delivery for Smart Mobility will accelerate in the coming years. Why? Because it's underpinned by a $5 billion order book already secured, already in the bag for rail and tolling contracts in Taiwan, Thailand and the U.S. And these deliveries will pan out in the coming few years. This $5 billion figure excludes the New Jersey Turnpike Authority back office service contract with a value of up to USD 1.7 billion, including options. [indiscernible] will talk to this a little later, but we basically have been executing to this contract and collecting revenue already. But we did not recognize it because we want to see how it develops in the coming months, and we are continuing to assess it. In terms of contract wins, USS secured $3.9 billion of new contracts in 2025, of which $0.5 billion was secured in the fourth quarter alone. Again, the contract win, similar to the other 2 segments, far exceeds the revenue drawdown from order book, $3.9 billion versus $2 billion. And this provides very clear visibility to revenue growth in the coming years. Slide 18. On a BOP basis, USS EBIT declined by $8 million to $32 million, mainly due to higher losses in the Satcom business. This was partially offset by continued growth in Urban Solutions, which is well positioned to grow because of a solid multiyear order book as we discussed earlier. On a reported basis, EBIT for USS was minus $556 million due to direct impairment loss, net of divestment gain of [indiscernible]. Slide 19. We have been providing you update on Satcom, and we will do likewise in this briefing. Allow me to walk you through the transformation progress within the iDirect Group and provide an outlook for Satcom in 2026. First, on the left of your slide, there is good revenue momentum into first quarter '26 at a minimum. On the commercial and government markets, we are expecting a stronger first half 2026, underpinned -- for a stronger first quarter 2026, underpinned by secured orders across multiple commercial and defense customers. These orders, including customers in Saudi Arabia and Europe, will deliver year-on-year revenue growth in 1Q 2026 compared to 1Q 2025. Intuition, which is our multi-orbit platform, is gaining good traction, for example, with customers like Verizon and AI Telecom of Mexico signing up to this program. Separately, iDirect government was qualified under -- by the government to participate in the U.S. MDA Shield contract, strengthening our position in the government segment. So on the left, on the revenue side, the outlook looks good. We are targeting for stronger year-on-year growth, not just in first quarter, which we have good visibility, but also in the first half of 2026 year-on-year and the second half of '26 year-on-year. We will keep you posted as the year progresses. Second, on the right-hand side, that's the cost outlook. Actions relating to about $43 million of annualized savings were successfully completed in 4Q '25 and 1Q '26. And these are beyond what we brief you in earlier years where there were rationalization occurring in iDirect. So these are recent actions taken in 4Q '25 and 1Q '26, producing $43 million of annualized savings that are already flowing into the bottom line. Now the second set of actions relating to the remaining $20 million are on track. The items have been identified. We are executing towards it, and we expect to complete it by second quarter 2026. Therefore, we can expect an annualized total cash savings of $43 million plus $20 million, which is $63 million to accrue in full commencing from third quarter of this year. So on an annualized basis, from third quarter of this year, second quarter next year, we should see a flow down of $63 million of cash savings. Our priority is to continue focus to support customers and to turn around the business while we evaluate the best path forward for our Satcom business, including strategic actions. Nonetheless, revenue and cost savings is no regret and remain a top priority for [indiscernible]. Next, Slide #10 -- Slide 21, sorry. For financial year 2025, we completed several strategic divestments, Leboy, CityicapP, SPTel and Starco, which collectively generated net cash proceeds of $705 million. These divestments strengthened our cash position for the year. While these divested units will no longer contribute to group EBIT in 2026 after the divestment, the year-on-year reduction in this EBIT is expected to be fully offset by interest and tax expense savings as the cash proceeds were applied towards reducing debt. If we apply some of this towards reinvestment, and we can repeat our return on equity of 28.7%, I think you will have even more accretive EBIT going forward. Slide 22, productivity. Our OpEx over revenue growth has been trending well over the years, scale effects, continuous improvement, procurement savings and so forth. In 2025, we achieved a new low of OpEx over revenue ratio of 10.2%. As our revenue grow, we continue to experience scale and network effects. Together with productivity gains and cost savings, this helped to mitigate inflation effects in certain areas and help us improve margins as we have shown. Slide 24, contract wins and order book. Slide 25. We secured $18.7 billion of new contracts, a new record. The group ended the year with a robust order book balance of $33.2 billion, another record. Weaker U.S. dollar and Sing dollar as at end of 2025 compared to end of '24 resulted in a $0.5 billion downward adjustment to the order book. So had the exchange rate been constant, '24 and '25, our order book would look more like $33.7 billion. From this, about $9.9 billion is expected to be delivered in 2026. Now some of you will recall that in last year in '25, it was $8.8 billion to be recorded in the next year. So this number is creeping up quite fast. Slide 26. This slide highlights some of our major wins in 4Q '25. And in this period, the group secured $4.7 billion worth of new contracts, $1.7 billion from CA, $2.5 billion from DPS, $0.5 billion from USS. This brings the total contract value for the year '25 to $18.7 billion. Next, debt management. The company did gear up to seek growth. And some of the major acquisitions we did was MRAS, which is performing very well today, TransCore and so forth. And because cost of debt is always lower than cost of equity, I think it makes sense to gear up to make sensible accretive acquisitions. But since then, we have been performing well operationally, generating the cash flows that I talked about. And hence, our debt level has been dropping from $6.5 billion in '22 to $6.1 billion to $5.8 billion to $4.8 billion. And additionally, the credit metric and rating agencies like to use debt to EBITDA has been dropping from 5.2 in '22 to 4.2, 3.6, 2.7. So hence, our credit rating remains very strong at AAA stable by Moody's and AA+ by S&P. Next, Slide 30, dividends. For 2025, the Board has recommended a final tax-exempt cash dividend of $0.06 per ordinary share as well as a special dividend of $0.05 per share for the financial year ended December '25. Payment of the final dividend is subject to shareholder approval at the upcoming 2026 AGM. The ex dividend date to be eligible for final dividend is 28th of April 2026. If approved, shareholders will receive their dividend on 13th of May 2026. For the first 3 quarters of 2025, we have already paid out 3 interim dividends of $0.04 each, totaling $0.12. This brings the total dividend for 2025 to $0.23 if you add the final dividend. And as previously shared, the 2026 total dividend shall be determined by the sum of 2 elements. Firstly, $0.18 per share, which is our ordinary dividend as a base. And you add to that 1/3 year-on-year incremental net profit, which we have communicated at Investor Days, but using the 2025 BOP net profit of [ 851 ] as a base and then on a per share basis, adding that to $0.18 will be the dividend guidance that we are giving for 2026. And all the net profit parameters will exclude one-off effects of major divestments and impairments. I think that truly reflects the underlying performance and how we will share the underlying performance with shareholders. Finally, Slide 32 is the message from our Group CEO and President. In 2025, the group delivered excellent set of underlying performance, reflecting the strength and resilience of our businesses. We continue to streamline our portfolio through several divestments, recycling capital and enhancing our focus on our core businesses. Looking ahead, supported by strong growth momentum and a robust order book, the group is very well positioned to deliver on our strategic objectives and 2029 targets. This marks the end of our presentation. Thank you very much for your attention.

Thank you, Cedric. May I now invite our panelists up on stage, please. The panelists this morning are Vincent Chong, Group President and CEO; Cedric Foo, Group CFO; Marvin Tan, Group Chief Operating Officer, Technology and Innovation and President, Defense and Public Security; Tan Lee Chew, Group Chief Commercial Officer, Market Development and President, Smart City and Digital Solutions; and Jeffrey Lam, Group Chief Operating Officer, Operations Excellence and President of Commercial Aerospace. I will now hand the floor over to Vincent to deliver his remarks. Vincent, please.

Well, good morning. Welcome to the SP Engineering Full Year 2025 Results Briefing. Very good to see you. And for those of you who signed online, thanks very much for joining. And for those who celebrate the Lunar New Year, let me just wish you a very happy Lunar New Year of the Fire Horse. Hopefully, that brings us all good health and prosperity in 2026 or the year of the Fire Horse. Now building on the financial results covered by Cedric just moments ago, I will focus on a few key takeaways. First, our 2025 results demonstrated the underlying strength of the group's business. Our base operating performance, or BOP for short, broke new highs, including our BOP profit before tax, which passed $1 billion, as Cedric already shared. On a BOP basis, 2025 was a very strong year with robust revenue and net profit growth. The fundamentals of the business continued to strengthen through the year. And revenue, we didn't really call this out, but I'll share with you. Revenue would have been 1 percentage point higher if not for the weaker USD, U.S. dollars in '25 versus 2024. 2025 was also a year of active portfolio actions. The divestments generated net cash proceeds and gains and our decisive steps or were decisive steps to streamline our portfolio, recycle capital and sharpen the group's focus. We also made impairments relating to the iDirect Group and JetTalk, which we -- which were noncash in nature, following a reassessment of near-term assumptions of the business in a challenging operating environment, which we discussed extensively in November last year. Building on the strong first half, underlying performance was sustained through the second half with continued year-on-year growth. Subsequently -- or sequentially, underlying performance reflected continued revenue momentum with underlying net profit growth outpacing revenue growth, as Cedric highlighted. Taken together, the group remains confident in achieving our 5-year plan targets as set out during our Investor Day last year. Beyond financials, technology and innovation remains central to how we compete in the various domains, and many of you would have seen this being reflected in our multi-domain capabilities showcased at the recent Singapore Air Show, where we had very good customer engagements. This reflects sustained investments over the years in strengthening our core engineering and technological capabilities, building our R&D ecosystem and innovating in areas that translate into real customer outcomes, which in turn underpins our long-term growth. Let me just next talk about the next -- the 3 segments. For Commercial Aerospace, in a highly competitive environment where customers place exacting demands on capability, reliability and delivery, our strong performance in 2025 reflects not just a continued recovery in the aviation market post-COVID, but how this business has been built and positioned over time across both OEM subsegment, particularly our [indiscernible] business, and our MRO activities. We have continued to optimize our global network, as we have shared with you across our facilities in Singapore, China and the U.S., particularly for our hangar capacity, expanding where demand is growing and streamlining where needed, while maintaining a strong and competitive MRO footprint globally and sharpening execution across the network. This includes capacity and expansion in our engine MRO operations in Singapore, alongside our early investments in LEAP engine MRO capabilities, which have strengthened our ability to support customers as the LEAP fleet continue to expand. This is evident in the scale of the Commercial Aerospace business today with a revenue of $5 billion, which is more than double its pre-COVID level and is further validated by strong contract wins during the year, as Cedric walked you through. Together, these outcomes reflect both the strength of our customer value proposition and our consistency of execution in this business. Next, moving on to the Defense and Public Security segment. The segment delivered a strong full year performance with contributions across its subsegments. Following strong first half, the second half revenue moderated to 5% year-on-year growth, reflecting the timing of project deliveries that is typical of the business as well as the divestment of LeeBoy in September last year. And if you rebase the revenue for DPS without LeeBoy, second half, we would have grown by 9%, as Cedric also mentioned. On a rebased basis, adjusted for LeeBoy, full year revenue and BOP EBIT growth remained really quite robust. At a subsegment level, Land Systems rebased revenue grew 4% year-on-year, rebased without Leeboy, I meant. All other subsegment revenues also grew. You can find those information in the latter half of the analyst PowerPoint presentation that you have a copy. Contract wins for the [indiscernible] segment were strong at $9.1 billion. And while wins can be lumpy by nature, it depends on timing of projects at the customer end. The segment benefits from good revenue visibility, supported by ongoing programs. Digital Systems and Cyber continue to benefit from demand for secure, digital and cyber-enabled solutions across defense, public security and critical infrastructures. We continue to see good traction in international defense markets. Though progress remains program timing driven, as I mentioned, it really depends on customers' project timing. And we are engaged with customers at a mature stage in a couple of other programs, and we'll update the market when appropriate. We marked a key milestone in our international defense business with our entry into the Qatar defense market, as Cedric already mentioned, as you would have seen the announcement this morning. It's a 5-year MRO contract for the Qatar Emiri Land Forces. The win reinforced the fact that Middle East is a key market for us as we articulated during our Investor Day. While the digitally enabled end-to-end MRO program for the Qatar Emiri Land Forces highlights our capability to deliver long-term technology-driven land forces support. Later on, Mervin can shed a little bit more information on this particular contract, which is a key win for us. Now turning to Urban Solutions and Satcom. Urban Solutions performance was supported by steady project execution and increased delivery momentum, particularly in the second half as projects progressed. Beyond near-term delivery, what gives us confidence is the structural relevance of this business. As urbanization accelerates globally and cities modernize critical infrastructure, demand for integrated technology-enabled smart mobility and urban systems continues to grow. This gives us good visibility on business growth, particularly across the smart mobility pipeline. On the iDirect Group, as Cedric has outlined, we are seeing improving activity heading into 2026, supported by secured orders and progress on the intuition multi-orbit program. We are targeting a stronger year-on-year first half revenue for our Satcom business, as Cedric already mentioned. On the cost side, we have already implemented about $43 million of annualized cost savings for our Satcom business, which are flowing through to the bottom line, with the remaining actions -- which will be flowing through to the bottom line with the remaining actions on track. In total, these initiatives are expected to deliver about $63 million of annualized cash savings, reinforcing our focus on cost structure. Our priority remains supporting customers, executing the turnaround and evaluating the strategic path forward for the Satcom business or, in particular, the iDirect Group. Overall contract wins of $3.9 billion for the USS segment well exceeded the 2025 revenue, as Cedric pointed out, supporting good revenue visibility, particularly for Urban Solutions. Importantly, this visibility is supported by a strong pipeline of major smart mobility projects, which are moving progressively into delivery. We have shared that these programs are expected to drive a meaningful step-up in Urban Solutions revenue in the coming years as large-scale rail and tolling projects advance through their delivery phases. And next, in terms of order book and new orders secured, we secured wins of $18.7 billion last year, strengthening our order book to $33.2 billion at year-end. Our record order book is a clear leading indicator of revenue growth in the years ahead. And finally, on dividend, our Board of Directors has proposed a final dividend of $0.06 per share, bringing the total ordinary dividend for financial year 2025 to $0.18 per share, together with a one-off special dividend of $0.05 per share. Subject to shareholders' approval at the AGM, shareholders will receive total dividends of $0.23 per share for financial year 2025. This is consistent with what we announced at the third quarter 2025 market update in November last year. As we have mentioned at our Investor Day presentation, our dividend policy reflects our focus on realizing value and returning that value to shareholders as the group's profitability continues to strengthen. Finally, our strong underlying results and BOP performance in 2025 speak to the clarity in the group's strategy and disciplined execution of our businesses. We will continue to well execute our strategy, maintain financial strength and return value and return value to shareholders while continuing to keep a long-term view of our business strategy and growth. On that positive note, we will now take questions.

[Operator Instructions] May we have our first question from the room, please?

[indiscernible] Roy and then we go to Lori.

Roy from UOB Kay Hian. First, congratulations for the very strong core performance. I have 3 questions each related to different segments. Okay. So the first question is for the Defense segment. I understand, Cedric said, we expect to double the international contract wins. We already doubled this year, and we will try to double next in 2026. So could you please share with us what is the international Defense revenue as a percentage of your total Defense revenue? And also in terms of your contract double -- doubling your contract wins, could you please share the scale of your contract wins for international Defense in 2025? That's for the Defense segment. For the Urban Solutions and Satcom segment, I understand for iDirect, there will be -- sorry, $63 million of cash cost savings initiatives. I want to double clarify this one. Is it -- does it include the previous $15 million amortization savings from the impairment or is on top of that? And it seems to me based on your $63 million savings, even without potential disposal, you may also be able to turn around the operation this year. I also would like to clarify on that. And the last question is for Commercial Aerospace. I see for the second half, there is improving in your operating margins, even excluding the disposal gains from the [indiscernible]. This improvement in operating margin year-on-year, I would like to know what is -- what caused the improvement, and whether this is sustainable in 2026?

Okay. Thank you, Roy, for your questions. I'll, of course, point to my colleagues for the Commercial Aerospace question. I'll let Jeff answer as the third answer. And then we talk about USS. So first of all, the $63 million cash savings is over and above the amortization and depreciation savings. I'll let Lee Chew go into a little bit more details. And then on your questions on DPS, we do not disclose international defense revenue as a percentage of total defense revenue. But we will let Marvin talk about the scale of international defense wins in 2025. Maybe we'll start with Marvin, then we go to Le Chew and then followed by Jeff.

Thank you very much, Roy, for your question, and happy New Year to you, and thank you, Vincent. Well, I would say that the doubling of our international defense win for 2025 is a significant milestone for us. And in terms of the figures, I would just highlight that it's more than SGD 600 million, okay? And that's a double from 2025 numbers -- 2024 numbers. And looking ahead to 2026, as you already heard from our announcement this morning, our MRO win of -- for the Qatar Emiri Land Forces land platform maintenance requirements amounts to about SGD 470 million. So taken together, we are quite confident given the prospects that we are looking at, some of which are in quite advanced stages of discussions that we would be able to achieve in 2026, a doubling of that SGD 600 million that we have achieved in 2025. The source of my confidence come from what Cedric highlighted earlier about multiple irons in the fire, right, and some of which are in the advanced stage. Maybe I'll just quickly give you a sense of some of these opportunities that we are actively pursuing right now. So the MRO for the Qatar Emiri Land Forces is a win for us today. And beyond that, we are hoping that in the MRO space for land platforms, especially in the Middle East market, this would be the vanguard towards having more opportunities, not just within the Qatar Land Forces, but also to provide the same capability for other Middle Eastern militaries in that region. But beyond the land platform MRO, we are also looking at potential new builds for ship platforms for many of the customers in the Middle East as well as beyond. I would say that we are in quite advanced stages of conversation and discussions regarding potential new ship builds for another Middle Eastern country. And still in the area of new ship build, we are also pursuing quite actively opportunities for ship build to a European country as well as another country in the Asia Pacific region, okay? On land platforms, as I highlighted in the last quarter, we are in active pursuit for customers for our Bronco as well as our Terex platform. For the Bronco platform, as I highlighted previously, we are partnering with Leonardo as well as Ares for the Italian future all-terrain vehicle platform program. And that is something that is active right now, and we are in close conversation with partners there in order to fulfill the specific requirements of the customers. But beyond the Italians, we are looking at other opportunities in the European theater, which I highlighted previously, which includes Finland, which includes Austria, which includes Sweden, who are all actively -- have active interest in our Bronco platform. For the Terex platform, we are also in active pursuit of opportunities in the Middle East market, and we are in active conversation with the users there. And hopefully, some of these opportunities will turn into new wins for us. But beyond the new build for ships as well as land platforms, we are also -- some of you may recall that we announced a first overseas satellite win for UAE last year, right? That was in the third quarter, and we are hopeful that we will be able to add more satellites to other customers as well as current customers in the Middle East. Beyond that, we are also actively pursuing MRO opportunities for our military aircraft platform as well as potential C-130 upgrades, particularly in the Middle East as well as North Africa region. And you would have been keeping track of our successful sales of our munitions including the 155 mm as well as 40 MM, which has seen new customers globally, including in the Americas, in Europe, in Middle East and in Asia Pacific. So taken together, given that we have already clocked the Qatar MRO win under our belt, which amounts to close to $500 million, which we announced today, we have high confidence that we will be able to exceed the $600 million -- more than $600 million international business wins that we achieved in 2025 and to continue the momentum for more international business win at least twice the amount that we achieved in 2025 for 2026. Yes. I hope I answered your question, Roy.

So certainly, we're targeting to double that contract win figure in 2026 and hopefully, for international defense wins and hopefully, we can do better. Well, we'll see because sometimes for -- oftentimes for defense projects, the timing depends on customers' prioritization. So we don't have full control, but we certainly have quite a few opportunities that are being actively worked upon. And hopefully, we can share more news in time to come.

So I think Vincent mentioned the fact that the cost savings of $63 million is on top of impairment savings. And as we look at these cost savings, cash flow improvement, obviously, from an EBIT standpoint, we expect the EBIT to improve in 2026 as well. Cost management is a critical component of the turnaround effort. And I think your other question was, based on this, what is the progress against the turnaround? Cost element being one. The other that we also talked about in Cedric's update is revenue. And we are seeing secure orders that will give us a year-on-year growth in quarter 1 of 2026. And we talked about the fact that we are targeting a revenue picture for the first half to be stronger and obviously targeting to do the same in the second half as well. So that, together with the cost management, will set us on the right path to deliver even better turnaround than we had originally been forecasting and hope. So we'll keep you posted as we go along in the year. But so far...

On the revenue growth and the [indiscernible].

We are on the right -- we are on the right path, and we will obviously update, but we feel good about the revenue traction in the first quarter. We're targeting stronger first half and also stronger second half and cost reduction efforts are bearing fruit. So we'll update in due course, but it's certainly in the right track -- on the right track.

Okay. My turn, Roy. So straight to the point, excluding divestment gain, our second half revenue was actually up 12% over first half. So there's already strength on the top line. And then we also had -- we had good ramp-up on the engine revenue because we built new shop, we introduced new capability. We saw increased nacelle delivery in the second half, right? And we also didn't have costs associated with the closure of our mobile facility in the U.S. right? Okay.

So Lorraine, next.

Yes, great set of results, particularly on the margins, very impressive. Just following up on the trend of Roy's questions, maybe starting a couple of questions. One for Jeff. Looking at the commercial Aerospace margins, I think core margins is 9-plus percent. It seems to be back to pre-pandemic levels. I'm just very curious how much of that would -- and I note Cedric's productivity enhancement chart. But I'm just wondering how much of that is also due to operating leverage and also product shift -- product mix in a sense? And if there's -- going -- looking forward, if there's room for further margin improvement, is that mainly coming from productivity then? That's for Jeff. I just want to follow up with Marvin. Previously, you mentioned there's a structural change in defense demand. Our indication is that the demand is actually pretty -- much stronger than expected upfront. I'm just wondering when you look at the growth prospects going forward, I mean, this might be crystal ball gazing, but do you sense that this will continue for the next 5 years? Or do you have feeling that things -- after this inertial -- let's say, after this initial spurt, if things will sort of normalize if threats are perceived to be mitigated in that sense?

Okay. So on your first question, just recap the trending for our EBIT margin for commercial aerospace has shown consistent improvement over the last few years. You just recap, right? In 2023, we're 8.6%, 2024, we had 9.1%, 2025 is now 9.8%. And we have said -- and Jeff has said many times that we are targeting EBIT margin of more than 10% -- above 10% as our target, and we are certainly making progress. I'll let Jeff speak more to that. As a second answer, maybe we'll go to Mervin first, whether we see defense demand is structurally changing. And I think we obviously hope that the conflicts can subside. The question about defense industry is related, but it's a separate track in our view because there's a structural change in how countries are looking at defense spending. And I think this upward trend is going to last some time. We'll get Mervin to share more insights.

Thank you very much, Vincent, and thank you, Lorraine, for your question. We continue to stick to our assessment that the increase that we see in the investment in defense for various countries to be a structural shift. And the reason for that is supported by some of the conversations that we have with our, what we call the [indiscernible] directors of the various countries. [indiscernible] directors are essentially the leading individual of countries that are -- who have the responsibility of acquiring arms for their respective countries. And from those conversations, we assess that even if the current wars end, specifically the ones that we are seeing in Ukraine, the perception of threat, I believe, remains, especially in the European theater. So some of the conversations revolve around countries preparing for the reemergence of that threat even after the threat in Ukraine has subsided. It may come up in some other locations in Europe. I won't go to the specifics of it, but like I said previously, what we saw in the NATO Summit in June last year, where the nation states reached a historical decision to increase defense spending to 5% of GDP by the year 2035 is all [indiscernible] one. It's a telling one. I think in recent history, we have never seen, at least after the cold war, we have never seen such commitment by disparate states of NATO committing to spend up to 5% of their GDP. And individual states, even like Germany, openly say that to reach that 5%, their interim target is to hit almost 3% by the year 2029. But even beyond Europe, you see increased defense spending in other regions as well. The Japanese are now spending about 2% of their GDP on defense and the Japan being the third or fourth largest economy in the world, spending 2% of their GDP on defense, I would say, is quite unprecedented for a country like Japan. And they used to have a spending pattern of less than 1% of GDP, given that their defense force built up is primarily for self-defense given Article 7 in their constitution. Beyond Japan, we see the Canadians now looking at building quite significantly their own defense industry. And of course, when you build up your own defense industry there, you're looking at partners that will be able to help support transfer of technology and as well as sharing of technology in order for them to build up their own defense industrial base. And they are spending up to 2% of their GDP as well, which is also quite a significant increase from the past. And in the theater that we are actively involved in the Middle East, all, if not, I think almost all the countries have pledged to spend a lot more in defense over the next 5 years. So I think, one, given the kind of pledges that alliances like NATO is making with regards to long-term defense spending, i.e., 5% by 2025; two, countries beyond NATO looking at increasing their defense spending as a percentage of their GDP; and number three, from the feedback that we get when we talk to all the different [indiscernible] directors, Europe, in the U.S., in the Middle East as well as in our region, you get a very strong sense that this commitment to rearm and to sort of reconstitute the defense capabilities is structural in nature. And our assessment continue to be that even if the current war subside, such defense spending patterns or accelerated defense spending patterns will likely continue. So that augurs well for our Defense and Public Security business, which is the reason why we are confident to be able to double our new wins for 2026 over 2025, building on our doubling of our new wins from 2025 from 2024. So that source of the confidence is supported by the data that we are seeing.

Thank you, Mervin. Yes.

Lorraine, in many ways, you actually answered your own question because you mentioned operating leverage, which is the kind of scale that we are achieving and the product mix. In addition, obviously, we continue to work very hard on productivity gains, applying the latest technology in digital and AI. Our target, as previously communicated, is to grow Commercial Aerospace revenue at more than 2x industry growth rate, which is estimated at around 3% to 4% today. As can be seen from our latest results, our revenue outpaced our target and grew 14% year-on-year. Even though there may be short-term fluctuations in growth rate, I am optimistic that the market continues to be robust and steady. From an EBIT margin perspective, as Vincent has highlighted, we have always targeted double-digit margin, and we are progressively achieving -- getting closer to achieve that outcome, right? Thank you.

Thank you, Lori, for your questions. Anyone else? Okay, Jason, and then after that, Hong.

Jason from DBS. Just 2 questions for me. So the first one is for Jeff. So maybe if you could share an update on the progress of new hangers and engine shop capacity expansion. What kind of uplift in percentage terms to provide to -- in terms of capacity that will be coming on stream over the next few years? So that's the first one for Jeff. Second question is on the Urban Solutions and Satcom business. So this is for you, [indiscernible]. So maybe I was hoping you could provide some color on the kind of operating profits that the Urban Solutions subsegment has been able to achieve over the past few years, given that segmental operating profit figures are being dragged by Satcom. So it's hard to decipher, it's hard to tell the extent of growth that the core business has been able to achieve. And it's been a few years since [indiscernible] acquisition now. Hoping you can provide an update whether it's tracking your initial targets and whether you are still on track?

Okay. So Jeff will be able to give you an update on the capacities and for the new capacities that we are adding. For USS, we do not disclose operating profit at the subsegment level, but I think for URS is strengthening as you can tell. We are -- as we already mentioned, we also have a very strong pipeline of projects that we are delivering against in the Smart Mobility segment. So we expect URS to continue growing. And of course, the acquisition of TransCore was a good acquisition for us. We are on track to achieve what we set out to achieve the objectives of the acquisition. And we mentioned to you before, the order book of TransCore compared to when we first acquired it has more than doubled -- about doubled, excluding the New Jersey NJTA EasyPass back office project that we have started but have not recognized in the order book. So we are certainly on track, but [indiscernible] can give you more color about our URS business, not just tolling, but also urban mobility in the rail space, which we are really doing quite well.

Okay. All right. So you learned that we did rationalize the mobile facility in the U.S. in terms of optimizing our operations. But currently, we are building at 3 different sites for airframe maintenance capacity. One is Changi Creek in Singapore. Second is Pensacola hangar, construction continues. And third, our new [indiscernible] joint venture continues to build its second hangar. So over the coming years, we do expect to increase net capacity for airfreight maintenance by double-digit percentage. In addition, on the engine shop that we opened in Singapore last year, that will give us in the next few years, additional capacity of about 50% to overhaul engines, right? And you can already see the growth that we saw last year from -- in terms of engine maintenance work that was also driving a lot of the MRO growth. Thank you.

Okay. So maybe I'll start with TransCore. We have achieved the acquisition milestones in the first couple of years post acquisition. Obviously, TransCore is now part of the URS business. And to Vincent's point earlier, we are seeing good robust traction and growth in the Urban Solutions business. I guess that's what you meant when you say the core business. If you look at what we have shared in quarter 1 of 2025 and what we've reiterated today, we talk about the fact that just the mobility part of the business, looking at an order book of $5 billion, that's a subset of what we ended in terms of order books for 2025. So we see that as we look at the strength of the new contracts in Urban Solutions as well as the strength of our order book, the revenue and EBIT for this core business will increase with the major contracting to be delivered over the next few years. So in that context, this business, the Urban Solutions business with TransCore integrated as part of it, is tracking well and within expectations.

So [indiscernible], maybe you want to talk a little bit about the synergies, too. Post acquisition, after having TransCore as part of our network, we have secured wins for TransCore in the Asia Pacific region, which speaks to the synergy that this acquisition brought us.

Yes. So I think we have announced that TransCore won a contract in Southeast Asia early last year. And then we also announced a contract from Transport for New South Wales to deliver the next-generation multilane free flow tolling system. The synergies that we looked at as we acquired TransCore was to bring the tolling solutions from the U.S. into Asia Pacific. So we've seen that come through for Southeast Asia, also extending to South Pacific in Australia. On top of that, we are seeing that momentum also carrying forward into opportunities and RFPs that we are working on outside of Asia, outside of the United States into Middle East and so forth. So our teams are working together because, obviously, our footprint for Urban Solutions is not just restricted to Southeast Asia as well. So the teams are working together to extend the adjacencies of our capabilities, both from a road and rail perspective for Urban Solutions as well as the tolling part in road from TransCore.

Do we have anybody -- any questions from those who participated online? Then we'll come back to the physical attendees, if it's okay.

Yes, we have Louis from Citibank.

Congrats on the results. I have 3 questions on the 3 major segments. First off, for DPS, we noticed that half-on-half movements, ever since second half 2024, Marine Systems and Digital and cybersecurity have been consistently on upward trajectory, while land and defense and aero swing between the halves. But given your order win momentum recently and after the announcement today, do you see that changing so that everything will be essentially improving half-on-half from here on? The second question is on Commercial Aerospace. It seems that aero structures and system revenues in second half '25 have rebounded nearly back to the levels of first half '24. Is this largely due to nacelle, or is even TTF starting to pick up at this stage? And the last question for Urban Solutions essentially is, if we can get an update on the New Jersey Pipe contract issue? Is there any time lines or milestones we should look out for then you'll be able to put it as official order book?

So let's have Mervin answer your first question. Luis, thanks very much for your question. And then we'll get Jeff and subsequently Chew to answer the other 2 questions that you had. So Mervin, please?

Thank you very much, Luis, for your question and being online to listen to our presentation. I would say that your observation that for the digital kind of business where it tends to be more consistent in terms of new wins, right? Yes, I think that's correct. Because typically, the digital solutions kinds of wins, including cyber, of course, tend to be smaller and more consistent in nature. So to have consistent wins across quarters, across half-on-halves is quite expected. But I would say that for the engineering side, where we are looking at land platforms, ship builds as well as even defense aerospace kinds of business, the tendency for the wins tend to be lumpy and episodic. They can be large in nature, sometimes big and sometimes small. And I would say the timings of those wins are rather irregular. As Vincent pointed out earlier, some of these larger kind of contracts for land, marine or defense aero takes just long gestation times. And when they come in, they can come in quite episodically. And certain periods, there will be none, other times, there will be significant projects that we may win. So it can be quite episodic. And I would say that it's quite different in terms of the nature compared to projects that are in the digital space. Therefore, I would say that whether you're comparing quarter-to-quarter or even half-to-half comparisons or updates may not be as useful as it doesn't really reflect the underlying momentum of our defense business. I think a more useful gauge you should look at would be at the DPS level, our quarter-to-quarter reported wins, which you would have registered has been quite -- getting quite significant momentum over the last few quarters. I think those would be a better indication of our strong momentum that we have gathered over the last few quarters where eventually, many of these reported wins will translate to revenue. So I would say that don't look at it quarter-to-quarter or month-to-month at the subsegment level, look at it from the perspective of the entire DPS new wins quarter-to-quarter, and that will give you an indication of the strong momentum that we are enjoying currently. I hope I answered your question, Luis.

The aero structures and systems revenue in second half was stronger than in first half due to both nacelle and PTF revenue growth. Having said that, the PTF revenue in second half of '25 is still weaker than in 2024, right? So as we look forward, we are hopeful for the market recovery, and we continue to look out for the signs of this recovery.

Luis, for the New Jersey Tmpi Authority back office project, while the court appeal is ongoing, actually, the contract award has been given to us, it's signed, and we commenced project work in the middle of last year. As it relates to when we are going to add that to our order book, we are reassessing it, and we'll do that on an ongoing basis.

So basically, we're in a good position because the project has started and the work has started. But as far as when we recognize the order book, we'll continue to assess on an ongoing basis, okay? Okay. So any other -- we'll come back to the room and then we go back to the online participant again. So we say Hong Han, maybe.

Congratulations on a very strong set of results. I have questions regarding Qatar MRO contract wins and iDirect with respect to the Shield program. So 2 questions on Qatar MRO, right? I want to try to understand with regards to the MRO solutions that you provide. Is that agnostic of the military equipment your customer use? Or is that limited to a specific type of weaponry? I'm trying to -- I ask this question because I want to understand in terms of your addressable market and how it could apply to other potential customers as well. Second question on this MRO solution is, why is the tenure just a 5-year contract? It seems rather odd and short. We thought that MRO with regards to military tend to have a 10-, 20-year tenure. The last question with regards to iDirect would be on the Shield program. It looks like there's a lot of things going on there. Can we try to understand in terms of the addressable market that you're looking at and some near-term prospects?

Okay. All right. Thank you, Hong Han, for your question. We'll let Mervin start first and then followed by Lee Chew. Mervin, please?

Thank you very much, Hong Han for your question. Happy New Year to you. Thank you for your questions for the Qatar MRO because it gives me an opportunity to sort of highlight how pleased we are with this new win, right, as highlighted by Vincent earlier and also Cedric, is that this is an important win for us, not -- on a few fronts. First of all, it is the first breakthrough that we have into the Qatar market. That's number one. Number two is that I think more important than just a platform win, this is an MRO services win. What it means to us is that actually, you require more trust on the part of the customer to entrust the maintenance of critical assets and critical platforms of your land forces to a foreign supplier like ourselves. So it sort of underscored not only the confidence that they have in terms of our technical capabilities, but I think more importantly, the trust that they have that we will be able to respond effectively in terms of logistics support, in terms of technical support should the forces that are using these land platforms are caught into operations. It's not easy for them to make a decision. And therefore, their decision to award us this contract underscores both confidence, but more importantly, trust that they have that we will be there to support them in actual operations, right? On the technical competency front, I would say that the competencies are quite agnostic of the platform, but the technical solution are specific. So our MRO support is not just for one fleet of platforms. It's actually across different fleets of land -- different land platforms for the Qatari Emiri Land Forces. I wouldn't tell you the numbers because I don't think my customer is comfortable for me telling you the numbers. But I would say that it will be in excess of 5 different kinds of platform types. The competencies are agnostic because the technical capabilities that we have acquired over the years for MRO, of course, supporting the SAF, have come in quite useful. And that includes things like the design of the workshop, things like how we are able to leverage digital solutions in order to digitalize the MRO processes, cut down manpower, et cetera. Our philosophy of how we provision for spares, which is something that is an acquired skill after many years of support that we have provided to the SAF, right? So those kind of qualities, whether in the technical space, whether in terms of our process and procedures, in terms of our design of digitalization, process and procedures in terms of spares provisioning, those are not trivial and those are quite critical competencies that are agnostic to the platform that we support. Because those philosophies and capabilities that we leverage on in order to support the Qatari Land Forces, those are agnostic capabilities that we have acquired over the years, right? But the solution translating from these agnostic competencies into the specificities of the technical solutions for the different kind of fleets, right, that the Qatari Land Forces have, those are, of course, specific, okay? Those are specific. So we have to apply ourselves to some of the platforms where we already have competencies because the SAF have the same platforms, but we also have to apply those same competencies to support platform fleets that are first time for us. That means the SAF doesn't operate those, but they operate those platforms, but they have entrusted us to apply our competencies to come up with technical solutions for those platforms. So I hope I answered the first part. On the question of why it's a 5-year contract, I would say that this is the comfort level of the customer. But I will tell you that MRO services is very sticky, okay? As you can imagine, after what I described in terms of the competencies, the design of the workshop, the designs of the philosophy of how you do spec provisioning, the relationship that we have with the OEM that supply these platforms to the Qatari forces. So I would not be too concerned that it's a 5-year contract. It's the first time they are doing this. So you can imagine from their perspective is that they want to try it out, right? But as a supplier, I'm very confident because it's easier to change a platform type from one to another. It's very difficult to change your MRO partner from one to another. So I wouldn't put too much weight on the fact that it's 5 years. I would say that, that's because it's the first time for both of us. So we want to try it out. But I would say that I'm fairly confident that after these 5 years, we will be able to do a sufficiently good job to be able to continue to provide the service beyond the 5 years.

Well, thank you, Mervin. We are confident of our capability to add value and support the Qatari Emiri Land Forces. Let me also recap that the MRO contract covers digitization of maintenance workflows, anomaly detection, feed analytics. So it's not just a mechanical part, but it's going to be digitized as well, which plays to our strength because we do that very well over time. So we will be able to very well support the Qatari Land Forces for sure. So we are yet to...

So on the iDirect front, we are obviously very thrilled that iDirect Gulf has been qualified to supply the Shield contract, and this Shield contract is with the U.S. Missile Defense Agency. What it allows us to do is to be qualified to compete for task orders over the next 10 years. What has been announced is that the ceiling of this whole program is $151 billion. Of course, it's hard to crystal ball what that market share for us is going to be. But I think the important thing is that as part of our growth strategy in iDirect Gulf and Defense, we want to make sure that we engage early in government programs. So this is one of the examples of the programs. We are obviously also very laser-focused on building our government network. I think over the last few months, if you're following some of our press releases, you would see that, in November, we talked about our expanded leadership with Black Cat Systems, more for the Australian Defense Force to set together -- to set up together an advanced technology demo lab to look at innovations. In later part of 2025 in December, we talked about how our EPW, the European Protected Waveform program achieved a major milestone because we were able to complete the over-the-air testing successfully. In January of this year, we talked about this Shield contract. And then just very recently, we talked about how our manufacturing competency center in Belgium was selected by Raytheon to support NATO's ESSM Block 2 program. So that's the focus that we have, looking at how we leverage this increased demand for sovereign networks as well as this increased demand for secure communications. And so all of this will be part of that growth trajectory that we envision.

Thank you. We have a few other hands in the room. So we'll take time to cover all your questions, and then we go back to online later. Siew Khee, and then after that, we come to [indiscernible], since you have the mic. And then we'll Siew Khee, We'll cover all.

Zhiwei from Macquarie. Congratulations on a very good set of results. I have one question and it's on the defense side. It kind of follows up on what Luis was asking just now. So your defense -- the gist of the question is how do we think about your defense margins going forward as you increase the amount of contract wins that you have? And I'll expand a little bit on where I'm coming from. So as Luis said that most of your revenue growth has come from 2 areas, which is your digital systems and cyber as well as your marine, right? And that have been helping to lift your margins to the about 13% EBIT margin range. So I understand the MRCVs will help to improve margins, and it's not too difficult to see that digital systems actually have very high -- carry high margins with it. Now as you win your more other contracts, let's say, land systems, right, [indiscernible], if I look at your peers, their EBIT margins are closer to 10%. So how -- do I expect a certain form of dilution as these lumpy contracts come in to kind of keep your margin it is or even drag it down? Or can I still expect further improvements in your defense margin, if you see where I'm coming from? Also, you also have the Hunter AFV program that comes off this year and it's replaced by the Titan. So I'm also not sure how that affects your margins.

Is that the only question you have? Okay. All right. Mervin?

Okay. So thank you very much for your question, and happy New Year to you. And you can imagine how difficult it is for me to answer that question given the kind of product mix that I'm responsible for in DPS. I sell things from digital systems and like cloud solutions, AI, cybersecurity, data diodes, all the way to armored fighting vehicles, ships and all that. So your question is particularly challenging because I'm not sure what specificity in terms of your product that you are referring to. But suffice to say that I think there was a bit of a misinterpretation there where you said that we are only -- most of our wins come from digital systems, cyber and marine.

[indiscernible] delivered an improvement in margins, at least that's what we observed just from the financial statements. So I'm trying to understand, as your product mix changes, you sell more broncos, you sell more Terex, right? How does that margin evolve?

Okay. Okay. But I'm also selling more Terex yesterday.

Yesterday?

Yes. Because like, for example, we just won the contract, right, for the Terex for our Singapore Armed Forces last year. So but -- so I would say that I don't think that our margins would change significantly, I would say. In fact, over the last few years, I was looking at those numbers, and our margins have always been in the low teens. If you look at 2025, low teens, if you look at 2024, low teens, you look at 2023, low teens. And in that space of the few years, the product mix and services mix that we have contracted and converted to revenue are very diversified. And moving ahead, I would say that, that diversification will continue. So it won't come from just one specific business area, but we'll continue to deliver a very diverse range of products and services across our 5 business areas. So on that account, I would expect the margins moving forward for 2026, 2027 to continue to have that diversity, and therefore, to continue to have that comparable margins.

In our Investor Day targets, we said that net profit growth rate will be up to 5 percentage points higher than revenue growth rates for various reasons because I think the discussion now gets into very specific platform types. But at the higher level, with scale, with productivity that we have been showing that we are managed to achieve and then with scale of operations with product mix and margin, our net profit growth will continue to strengthen at a rate that is faster than our revenue growth holistically as a group for those reasons. So that applies across the 3 segments. Yes, can we have Siew Khee?

I'll just cut it to 2 questions. The -- just on strategic review and options for iDirect, where are we now? Whether there's any like time line pushing to the right in what we wanted to do? Is there any stumble block in that process? That's my first question. And the second question is on -- just going back to the MRO on defense side. Given that this is a major breakthrough, was it an open bid? How did they use to do their MRO? Was it internally? And what were the deliverables that allow them to -- I know that they trust you, but was it like cost optimization that you can actually give the customers to actually engage you instead of doing themselves or who were the previous provider? And what sort of CapEx or scaling that we need to actually do to be there to do this service?

Yes. So let's answer -- you have 2 questions. One is strategic actions for iDirect, right? The other one is Qatari Emiri Land Forces, how did they -- how did this opportunity arise? So when we talk about -- let's talk about Satcom strategic actions. We already mentioned that we are evaluating. There's never an assurance or definitive outcomes that we expect. So we'll continue to evaluate. Meanwhile, it is important for us to continue our turnaround, continue to focus on taking care of our customers, continue to focus on improving our revenue and cutting our costs. Whether strategic actions come at what time, I think we'll let the -- let this particular topic take its own cost, and we'll update as and when we have any, but the evaluation continues, right? The Qatari MRO contract. First of all, we are deeply honored to be selected. In talking to our partners and users and customers, they have high confidence in our ability to help them improve on their MRO performance. We won't go into details of who is the current provider. Those are, I think, customer information that we shouldn't get into. But suffice to say, they have high confidence that we will be able to add value to help them improve on their performance. And that, I think, is an honor that we have to execute against that expectation, which we are very confident that we will be able to do a good job. And then with that, there will be more opportunities that will come to us. And this is an important, I think, first step in the MRO space, especially for the Middle Eastern market. Okay. I hope that at least address your question for now, and we can come back to you if you have further questions later.

It's Da Wei from Morgan Stanley. I have 2 questions. First one is actually at a group level. I know we saw a series of portfolio management activities this year or 2025. Are we at the optimal level at this point? Or should we actually expect more on a going-forward basis? The second is actually on Commercial Aerospace. Congrats on a very strong growth. And I know you mentioned -- Jeffrey mentioned that we are adding capacity, et cetera. It sounds like there's significant capacity that's coming through. Can you also share some commentary with regards to the demand outlook? How should we think about the potential take up for all this capacity that's coming and the pricing with regards to that? And actually have further questions on defense bridge, but I think we can take it offline over lunch.

Yes. And the first question, can you repeat the last part? I want to make sure that we get your question.

So are we at the optimal level with regards to the portfolio at this point? Are you thinking of...

Portfolio.

Yes, potentially more divestments or...

Okay. Okay. Then we'll get -- I'll answer that question, and then I'll get Jeff to address your question on aerospace demand and pricing margin. As we mentioned oftentimes, portfolio evaluation is a continual process. We constantly look at the businesses in our portfolio, and we look -- we do so through several filters. First of all, is the business strategic still -- still strategic to the group? If it is, is it performing to our expectations financially? If it is, do we have a long-term expectation that you will continue to grow to a better scale, global scale. Then with those answers, it inform our decisions on whether or not it's a long-term keeper in our portfolio. We also ask ourselves whether a particular business when they -- based on their performance, whether it is worth more to a bit different owner than is it to us. Then we make that determination. It's an ongoing process, a business that we decide to have within our portfolio at a certain point in time might not be a business that we want maybe when the external environment changes. That's how we have been managing our portfolio. In the last 8, 9 years, we have either stopped, divested or shut down more than 20 businesses. We also, at the same time, acquired new ones that are strategic to the group. So -- and that will allow us to allocate capital efficiently, ending up with a portfolio that gives us the best value. So that is a continual process. So that, of course, in the years ahead, we'll continue to do the same. So we'll get Jeff to answer your questions on commercial aerospace. Da Wei, I hope I have answered your question.

Thank you for a very relevant question. The market -- the aerospace market is largely driven by the size of the fleet and the flying demand of the public. So as you can see, every year, the fleet size grows with new deliveries, and there will obviously be retirements. But there is a strong order backlog of over 10,000 aircraft that is yet to be delivered. And the OEMs are striving to deliver as many new aircraft as possible at a high growth rate. Although there are supply chain challenges in the short to medium term, there is a strong and steady demand for new aircraft based on the demand for flying. Secondly, as the fleet grows, the MRO demand also grows. As the fleet ages, the MRO demand also ages. So driven by the growth of the aircraft fleet in the market, there is also a strong growth in MRO demand that is steady and long term. As forecasted by the analysts, there is this -- MRO market growth is in the range of 3-plus percent for the next 20 years CAGR. And then thirdly, because of the fleet growth, there is also a growth in demand for financing. So there is -- the world's fleet is largely financed now. Over 55% of the fleet is financed as leased aircraft by the financing industry in support of the airlines. So this segment of business also grows. So what I have mentioned is actually aligns with our 3 segments of business, including the OEM product business; secondly, the MRO maintenance business; and thirdly, the leasing business. So we are plugged into all of these 3, and we continue to expect a steady, robust growth in the coming years. There is obviously competition in the market, but we are used to global competition across all of our business segments. We face global competition in any business that we try to win. So I think the positioning and the outlook is positive.

Any other question. Jesse?

Jesse from Bank of America Securities. My first question is, given we have witnessed very robust order wins last year, could we actually accelerate the review of our 5-year target? Or alternatively, what business trajectory scenario would prompt us to revisit that target as it may no longer align with our expectation? And second, more for Mervin, regarding to the Qatar MRO contract. Was it considered as part of the addressable -- international addressable market we mentioned before at $11 billion? If not, how should we think about the new revenue pool or addressable market after this initiative or contract win?

Okay. So I think they are all related questions. Maybe I'll take it and then we can invite Mervin to give you a little bit more insight. So we don't revise our targets in between that regularly because I think it is long-term plan. And as we mentioned, there's always an upside, downside risk to that set of targets and the external environment continue to change. What we have done in the last few -- many years, I think since 2018 when we first had our Investor Day meeting, we set a 5-year target. And then 3 years later, we had a second Investor Day in 2021, where we took stock of our progress towards the first set of targets. And then we set a new set of targets. In 2021, we set a new set of 5-year plan targets. And then last year, we set another new set while giving our stakeholders and shareholders an update of how we did versus the 2021 set of targets, and we'll follow this cadence. Suffice to say that at this time, we are not changing our targets despite the divestments that we have made. First of all, our 5-year targets are based on constant portfolio basis, excluding M&A and excluding acquisitions and excluding divestments. And we said that if there are divestments or new acquisitions, at the appropriate time, we'll adjust the targets. At this time, despite the divestments, we are not adjusting those targets because we are confident that we will have other growth levers that will allow us to pursue the same set of targets. As far as the defense pipeline of $11 billion is concerned, that pipeline was assessed prior to the announced increases in defense spending, especially in Europe. So directionally, you would think that the pipeline or the addressable market for us would have increased, which is also consistent with what we are seeing. So instead of updating that pipeline figure, we will update you as and when we win new contracts because they will be much more tangible. So I hope I answered your question. We are not adjusting the targets. We are very confident that we are on track to achieve them, and we will give progressive updates as and when we have new wins so that you can better calibrate our progress against those sets of targets. Jesse, thank you. Anyone else in the room with questions? Okay. So if not -- is there anyone else? Okay. If not, we'll adjourn the meeting. Let me just recap that we have really had a very strong set of underlying performance in 2025. And with a very strong order book, we are confident of our growth trajectory in the years to come as we have already articulated during our Investor Day and during our regular updates with you. We'll keep you posted of noteworthy developments. And on this note, thank you very much for joining us today, and we wish you a very good weekend ahead, today's Friday. Thank you very much.