Over the past five years, the quality blue-chip industrial companies Sembcorp Industries (SGX: U96) and ST Engineering (SGX: S63) have both done well for their investors. The former’s stock price has more than tripled, while the latter’s has more than doubled. Considering fundamentals and valuation, which stock is a better buy now?

Business Overview: Different Models, Different Strengths

ST Engineering – Steady Compounder

A defence provider for Singapore, ST Engineering, or STE, has three business segments, namely, Commercial Aerospace (CA), Defence & Public Security (DPS), and Urban Solutions & Satcom (USS). The non-discretionary nature of STE’s defence contracts, alongside essential maintenance, repair, and overhaul (MRO) activities for airlines, allows STE to earn consistent cash flows. Operating cash flow (OCF) has been positive in each of its last 10 completed financial years and averaged S$943 million, highlighting STE’s resilience in generating cash flows regardless of market conditions. The company looks set to end 2025 with positive operating cash flow, given its S$761 million in...