2024: Strong Results Point to an Undimmed Outlook

Seatrium (STM) has made a remarkable comeback, reporting its first annual profit and first dividend since 2017, marking a significant turnaround that is expected to be sustainable. Despite a slightly weaker 2H24 gross profit margin than anticipated, the company’s EBITDA generation remains robust. With S$14.6 billion in new orders won in 2024, Seatrium’s order-win outlook remains strong, driven by a healthy renewables and oil & gas outlook.

2024 Financial Results Overview

• Revenue surged by 27% YoY to S$9.2 billion, compared to S$7.29 billion in 2023.
• Net profit reached S$156 million, a remarkable recovery from a S$2.0 billion loss in 2023.
• Underlying EBITDA increased by 23% YoY to S$771 million.
• Achieved S$200 million in procurement savings and S$300 million in synergy and overhead savings, aligning with targets set during Investor Day in 1H24.

Dividend Surprise: Confidence in Sustainable Cash Flow

Seatrium declared a final cash dividend of S$0.015 per share, signaling management’s confidence in its strong and sustainable cash flow. Although the implied yield is less than 1%, this move is seen as a positive indicator of long-term growth potential.

Operational Highlights

• Robust Order Book: Net order book of S$23.2 billion with 34% linked to green/clean energy projects, including offshore wind and carbon capture.
• Innovative Leadership: Delivered the world’s first full-scale onboard carbon capture retrofit project and expanded into ammonia FPSOs and offshore floating wind technologies.
• Growth in Repairs & Upgrades: Despite a drop in the number of vessels, revenue grew by approximately 6%, reflecting a strategic shift towards higher value-added jobs like carbon capture and storage.

Solid Financial Position and Strategic Focus

• Net debt/equity ratio declined to 10.9% by end-2024 from 11.5% in 2023.
• Successfully reduced weighted cost of debt by 0.5 percentage points to 4.9%.
• Plans to further lower the cost of debt in 2025, enhancing financial flexibility.

Valuation and Recommendation

• BUY Rating Maintained with a target price of S$2.96, up from S$2.80.
• The target is based on a P/B multiple of 1.5x, reflecting Seatrium’s strong global competitive position, revenue visibility until 2031, and potential for more order wins in 2025.
• Key catalysts include:
  • Completion of MAS/CAD investigations.
  • New orders for rigs, offshore renewable installations, and fabrication works.
  • Repairs and upgrades for cruise ships and other commercial vessels.

Why Seatrium Deserves Your Attention

Seatrium’s resurgence from losses to profitability is underscored by its strategic focus on renewable energy, cost efficiency, and financial discipline. The company’s leadership in green technology and sustainable solutions positions it well for future growth.

Investment Insight: A Resilient Growth Story

With a robust order book, strategic cost management, and a clear vision for future growth, Seatrium is poised to capitalize on the rising demand in the offshore renewables and oil & gas sectors. Investors should consider accumulating shares in anticipation of the next breakout as the company continues its growth trajectory.

Maintain BUY – Target Price: S$2.96
Thank you