Executive Summary

After a sharp pullback in August, ST Engineering (S63) may finally be gearing up for its next leg higher. Prices found strong support at the $8.00 level, where a fresh 1GT Bullish signal has just emerged, hinting that the worst of the correction could be behind us. With momentum picking up again, traders are now watching closely as the stock approaches the $9.00 resistance, a key level that could unlock the path toward $10.00.

The bigger picture remains intact, ST Engineering is still riding its long-term uptrend, backed by strong fundamentals and a record order book exceeding S$29 billion. The question is no longer whether the stock can rebound, but whether bulls have the conviction to push through resistance and retest highs. With both short-term signals and long-term trends aligning, this could be the comeback setup that traders have been waiting for.

Singapore Technologies Engineering Ltd (SGX: S63) remains one of Singapore’s most resilient blue-chip counters, underpinned by its diversified businesses across Defence, Aerospace, and Urban Solutions. 

With a record order book above S$29 billion, the group continues to deliver steady growth and remains well-positioned to benefit from strong global defence demand and urban infrastructure projects.

The longer-term outlook remains bullish. Prices are comfortably above the 200-day moving average (blue line), while the 100-day moving average (red line) has flattened slightly but still trends positively overall. 

This reflects resilience despite recent volatility, and the structural uptrend remains intact.

ST Engineering recently corrected from the $9.50 high, with the 1GT Bearish signal in August, flagging profit-taking. The stock pulled back toward the $8.00 support, even briefly dipping below it,  which also coincided with the 100-day moving average.

Importantly, a fresh 1GT Bullish signal has since appeared at this support level, and prices have rebounded to the $8.40 – $8.50 zone, now acting as a new base.

The next immediate resistance lies at $9.00, followed by the $10.00 key resistance zone. Clearing $9.00 would be a strong confirmation that momentum is resuming, with bulls likely eyeing $10.00 as the next upside target.

For conservative traders positioning ahead of the next move accumulating on dips closer toward $8.00 - S$8.10, with a stop-loss below $8.00.

While aggressive traders can consider an entry upon a breakout above the $9.00 resistance, riding the momentum toward the $10.00 higher target

So, how does one take a position in ST Engineering to ride the uptrend further with lower initial capital outlay?

Investors who wish to be exposed to potential upside moves in ST Engineering shares can consider using call warrants such as IIEW to magnify the share price return using lesser capital and without the risk of margin calls.

There is no put warrant available over ST Engineering shares at the time of publication of this article.

Macquarie has a tool known as the Simulator Exposure to help investors estimate their investment and returns with warrants versus the underlying share, as well as the maximum holding period if one were to purchase the warrant.

Using the example of an investor bullish on ST Engineering shares at $8.00, an investor will have to spend $80,000 (before trading costs) if he/she were to buy 10,000 units of ST Engineering shares at $8.00. 

However, if one were to use trending ST Engineering call warrant IIEW to participate in ST Engineering further share price upside, the investor will need only to invest $15,385 to buy ~496,300 units of this ST Engineering warrant to achieve the same level of exposure.

This is because, ST Engineering call warrant IIEW has an effective gearing level of 5.2 times (at the point of using the tool) and will move approximately 5.2 times more than ST Engineering shares, and costs only $0.031 versus ST Engineering’s $8.00 share price say, on 29 September (note that this date can be adjusted to whenever ST Engineering falls from its current price to $8.00)

Exposure Simulator: type in number of shares you would buy to see the equivalent amount of warrant investment in chosen warrant to achieve the same level of stock exposure

Entering the target exit level of $9 under the “Target exit” column, which is 12.5% higher than the intended $8.00 stock entry price, and moving the number of days the warrant is held to say 17 days later, you will observe that the warrant will now increase by more than 5 times i.e. +67.7% to $0.052. 

This translates to a projected absolute dollar gain of $10,422 versus the $10,000 gain if one were to buy 10,000 units of ST Engineering shares.

Exposure Simulator: type in the target exit/profit-taking level and increase the number of days held to simulate the expected returns on the warrant versus holding ST Engineering shares

The longer ST Engineering shares take to rise to the target $9 exit level, the more the warrant holding cost will set in to erode the geared return of the warrant. 

For example, if ST Engineering took 30 days instead to reach $9, the call warrant will now only increase 54.8%. 

The absolute dollar gain of the warrant will now be lesser than if one were to hold onto ST Engineering shares, although the percentage gain is still 4.4 times more.

Warrants will see lower geared returns with longer holding periods. Increase the holding period to see the maximum holding period one should hold onto the warrant for

To know how long one can hold onto this ST Engineering warrant for based on the $9 exit level, increase the holding period to the point where the warrant no longer makes geared returns versus the stock i.e. 74 days where the warrant will see only a 12.9% gain compared to ST Engineering’s 12.5% gain.

If ST Engineering is trading less than $9 in 74 days, a warrant investor who bought this warrant should consider cutting his/her losses anyway.

Investors should note that leverage works both ways. 

Whilst warrants can be used to magnify one’s exposure and potential gains from favorable price moves in the underlying shares, losses can also be magnified when the price moves against the investor. 

Additionally, using a ST Engineering call warrant will only allow you to participate in the share price move, and is not equivalent to investing and holding the shares directly.

The sharing on how one can take a position using warrants has been contributed by Macquarie Warrants Singapore who is the issuer of these warrants listed on SGX.

About the Author - Joey Choy

Joey is Singapore’s renowned mentor on how to make an income by trading the stock market, an author and one of the most-watched, quoted and followed stock trading trainers in Singapore. Over the years, he has conducted numerous full house seminars, enriching thousands to trade more profitably. 

Joey’s come back story from a S$740k debt has been featured in the Business Times and inspired thousands in Singapore. In less than 3 years, he is highly regarded as one of the Top Tier Remisiers (Stock Brokers) and Traders, bagging numerous yearly awards like Top Trading Representative and Top CFD Achiever every year from 2014 to 2023 in Phillip Securities.

More about Joey here

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