OCBC Investment Research
29 May 2025

Seatrium Limited: Solid Order Book and Margin Recovery Position Singapore’s Offshore Giant for Profitable Growth

Overview: Seatrium’s Strategic Focus and FY28 Targets

Seatrium Limited, a leading Singapore-based engineering solutions provider for the offshore, marine, and energy sectors, continues to focus on delivering profitable growth and executing a robust order book. With nearly six decades of industry expertise, Seatrium has established itself as a global player in the design and construction of rigs, floaters, offshore platforms, and specialized vessels, as well as ship repair, upgrade, and conversion.
Following the successful integration and strategic review in 2023, Seatrium has set ambitious targets for FY28:

• EBITDA of at least SGD 1 billion
• Return on equity (ROE) of at least 8%
• Net debt/EBITDA ratio of 2-3x

As of 31 March 2025, Seatrium boasts a net order book of SGD 21.3 billion, supporting deliveries through 2031.

1Q25 Business Update: Order Book and Project Delivery

The first quarter of 2025 showed steady operational progress:

• Net order book stood at SGD 21.3 billion (down from SGD 23.2 billion as of 31 December 2024), spread across 26 projects with delivery timelines extending to 2031.
• Key project milestones included the delivery of the One Guyana FPSO to SBM Offshore and completion of 45 repair and upgrade projects.
• On 28 May 2025, Seatrium announced the delivery of BW Opal to BW Offshore.

Management reported that margins are trending positively, supported by:

• Higher revenue share from new projects secured at improved margins
• Divestment of non-core assets
• Gradual unwinding of intangible assets recognized during Seatrium’s formation
• Ongoing cost management initiatives

Financial Performance: Key Figures and Forecasts

Seatrium’s financial summary reflects a recovery trajectory, with improving profitability and margins:

Key takeaways:

• Revenue is forecasted to grow steadily, crossing SGD 10 billion by FY26E.
• Gross profit and net margins are expected to recover significantly, with gross margin improving from 3.1% in FY24 to 9.4% in FY26E.
• Dividend payouts are modest but set to grow in line with profitability.

Order Win Cadence and Revenue Outlook

Seatrium’s contract win momentum has slowed, with only one notable contract in 1Q25:

• On 13 May 2025, Seatrium secured a Floating Storage Regasification Unit (FSRU) conversion contract from Höegh Evi, with engineering works set for 18 months.

While management remains optimistic that direct tariff impacts will be contained, there is evidence that some customers are delaying final investment decisions amid broader macroeconomic uncertainty. As a result, revenue forecasts have been trimmed and fair value estimate revised downward from SGD 2.82 to SGD 2.76 per share, based on a target FY25E price-to-book multiple of 1.4x.

Peer Comparison: Performance Metrics

A comparison of Seatrium’s valuation and operating metrics with local peers:

ESG Leadership and Climate Risk Management

Seatrium’s environmental, social, and governance (ESG) profile is robust:

• The company’s ESG rating was upgraded in March 2023 following the merger of Keppel Offshore & Marine and Sembcorp Marine.
• Seatrium leads most global peers in corporate governance, with a majority-independent board despite being a state-owned enterprise.
• Labour management and safety practices are on par with industry standards; safety policies extend to contractors.
• Physical climate risk is identified as the largest climate-related factor potentially impacting company valuations.

Key Catalysts and Risks for Investors

Potential upside catalysts include:

• A rise in oil and gas prices, supporting offshore project activity
• Larger-than-expected order wins at attractive margins and favorable contract terms

Key risks to monitor:

• Poor execution and lack of cost control
• Asset impairments and provisions
• Low new order inflow

Company Profile: Segment and Geographic Revenue Mix

Seatrium’s business is well-diversified across segments and geographies:

• Business Segments: Oil & Gas Newbuilds and Conversions; Renewables and New Energies; Specialized Shipbuilding; Repairs & Upgrades
• FY24 Segment Revenue: Rigs & Floaters, repairs, etc. (99.5%), Ship chartering (0.5%), Others (0.0%)
• FY24 Geographic Revenue: Brazil (57.5%), USA (13.7%), Singapore (5.4%), Others (23.3%)

Seatrium’s customer base includes major energy companies, floating production unit owners, shipping companies, as well as cruise and ferry operators.

Historical Financial Performance Snapshot

A look at Seatrium’s recovery from recent years:

Key profitability ratios and margins:

• Return on Equity improved from -39.68% in 2023 to 2.46% in 2024.
• Operating margin returned to positive territory at 2.3% in 2024, after years of losses.
• Net debt/equity improved to 0.18 in 2024, reflecting a strengthened balance sheet.

Valuation and Shareholder Information

• Ticker: SEAT.SI
• Market Cap: SGD 7.0 billion
• Shares Outstanding: 3,385 million
• Free Float: 62%
• Top Shareholder: Temasek Holdings Pte. Ltd. (37.7%)

Seatrium’s fair value estimate stands at SGD 2.76 per share, with a BUY rating indicating a total expected return (excluding dividends) exceeding 10% at the current price of SGD 2.06.

Conclusion: Seatrium Set for Profitable Growth Despite Market Uncertainty

Seatrium Limited is firmly on the path to recovery, leveraging its robust order book, margin expansion, and disciplined cost management. While order win momentum has moderated in the short term, Seatrium’s diversified business segments, improving profitability, and strong ESG profile make it a compelling long-term investment in the offshore and marine engineering sector. Investors should monitor order inflow, execution efficiency, and sectoral trends as key drivers for future performance.