Overview

The offshore and marine industry in Singapore continues to show strong momentum, with Seatrium Ltd leading the charge. This report by CGS International dives deep into Seatrium’s financial performance, growth prospects, and its position within the broader industry landscape. It also benchmarks Seatrium against its peers across Singapore, China, Korea, Japan, and the United States, offering a comprehensive view of the sector.

Seatrium Ltd: A High-Conviction Pick

Seatrium Ltd (STM) is emerging as a powerhouse in the offshore and marine industry. The company recently announced a Memorandum of Understanding (MOU) with BP Exploration & Production Inc. for a second floating production unit (FPU), named Tiber, to be deployed in the US Gulf of Mexico. This follows its earlier contract for the Kaskida FPU from BP in December 2024. The new contract, estimated at US\$750-850 million (S\$1-1.2 billion), underscores STM’s growing expertise in delivering complex, innovative deep-water production facilities.

Seatrium’s FPU portfolio includes notable projects such as Shell’s Vito (delivered in 2021, S\$250 million), Whale (delivered in 2023, S\$300 million), and Sparta (to be delivered in 2026, S\$300-400 million). The company’s AmFELS yard in Texas has also gained traction, nearing the delivery of Charybdis, the first U.S.-flagged wind turbine installation vessel.

Key financial metrics project a strong recovery for STM, with net profits expected to grow from S\$119 million in 2024 to S\$474.3 million in 2026. Core EPS is forecasted to rise from S\$0.06 in 2024 to S\$0.14 in 2026, driven by robust order wins and margin expansions. Despite its challenges, STM remains a high-conviction pick with a target price of S\$2.90, offering a 26% upside from its current price of S\$2.30.

Keppel Ltd: Steady Growth Ahead

Keppel Ltd continues to demonstrate resilience in the offshore and marine industry. The company’s 2024 forward P/E stands at 14.3x, with a recurring ROE of 7.6% and a dividend yield of 4.9%. Keppel’s strategic focus on integrated global asset management has positioned it as a leader in the sector, with total revenues and recurring profitability aligned with industry growth rates.

The company’s stock is currently rated as “Add,” with a target price of S\$9.28, reflecting strong investor confidence in its future performance.

Capitaland Investment: A Promising Asset Manager

Capitaland Investment (CLI) has carved a niche as an integrated global asset manager. With a forecasted two-year EPS CAGR of 18.8%, CLI is expected to deliver consistent growth through its diversified asset portfolio. The company currently trades at a forward P/E of 13.2x for 2024, with a recurring ROE of 6.5% and a dividend yield of 4.9%.

CLI’s stock is rated “Add,” with a target price of S\$4.30, highlighting its strong fundamentals and growth prospects.

Yangzijiang Shipbuilding: A Leader Among Chinese Peers

Yangzijiang Shipbuilding remains a standout performer among Chinese shipbuilders. The company boasts a forward P/E of 10.9x for 2024, supported by its robust order book and operational efficiencies. Its recurring ROE stands at an impressive 22.2%, with a dividend yield of 2.9%.

Yangzijiang’s stock is rated “Add,” with a target price of S\$3.62, reflecting its strong market position and growth trajectory.

Korea Shipbuilding & Offshore: A Rising Star

Korea Shipbuilding & Offshore is making waves in the industry with a forward P/E of 9.9x for 2024 and a recurring ROE of 14.2%. The company has demonstrated strong growth potential, with a two-year EPS CAGR of 77%. Its focus on high-value contracts and technological advancements positions it as a formidable player in the global market.

The stock is rated “Add,” with a target price of KRW 283,000, signaling significant upside potential.

Samsung Heavy Industries: A Robust Contender

Samsung Heavy Industries continues to capture market share in the offshore and marine sector. The company’s forward P/E stands at 24.4x for 2024, with a recurring ROE of 12.4%. With a two-year EPS CAGR of 95.1%, Samsung Heavy Industries is poised for strong growth in the coming years.

The stock is rated “Add,” with a target price of KRW 16,500, reflecting its solid fundamentals and growth outlook.

ST Engineering: A Diversified Industrial Giant

ST Engineering is a key player in the industrial and conglomerate space. The company boasts a forward P/E of 19.2x for 2024 and a recurring ROE of 28.6%. Its diversified portfolio and strong market presence have enabled it to deliver consistent growth and shareholder value.

The stock is rated “Add,” with a target price of S\$5.30, underscoring its robust financial performance and growth prospects.

Conclusion

The offshore and marine sector is poised for robust growth, with companies like Seatrium Ltd, Keppel Ltd, and Yangzijiang Shipbuilding leading the charge. Each of these companies brings unique strengths to the table, from technological innovation to strategic market positioning. Investors looking to capitalize on the sector’s growth should consider these high-conviction picks as part of their portfolio.