CGS International
June 30, 2025

Seatrium Ltd: Robust 1H25 Earnings Preview and Petrobras Project Milestones Set Stage for Growth

Introduction: Seatrium Positioned for Stronger 1H25 Performance

Seatrium Ltd (STM) is on track for a notable turnaround and robust growth in 1H25, leveraging its global network and strategic project execution. As anticipation builds for the release of its first-half results by end-July or early August 2025, STM is poised to deliver significantly improved financial metrics, driven by large-scale projects and expanding margins.

1H25 Financial Preview: Revenue and Profit Set to Surge

STM is expected to achieve approximately S\$4.7 billion in revenue for 1H25, representing an 18% year-on-year increase, despite a 9% decrease compared to the previous half. Net profit is forecast at S\$153 million, up 33% year-on-year and a substantial 80% increase half-on-half, assuming no exceptional items or significant forex impact. Gross margins are projected to rebound to 8%, up from 2.7% in 2H24 and 3.7% in 1H24, reflecting effective cost management and the absence of major overruns.

• Revenue: S\$4.7bn (+18% yoy, -9% hoh)
• Net Profit: S\$153m (+33% yoy, +80% hoh)
• Gross Margin: 8% (vs. 2.7% in 2H24 and 3.7% in 1H24)

Key Project Milestone: First Petrobras P-78 FPSO Delivery in 2H25

A pivotal driver for STM in 2025 is the scheduled delivery of the first P-78 FPSO for Petrobras. Secured in 2021 for US\$2.3 billion, this floating production, storage, and offloading vessel is tailored for Brazil’s prolific Buzios field. Key specs include:

• Production Capacity: 180,000 barrels of oil per day
• Gas Processing: 7.2 million cubic metres per day
• Oil Storage: 2 million barrels

STM expects to recognize financial delivery upon the FPSO’s first oil in 2H25, with a project gross margin estimated at 9-10%. Management guidance for similar post-merger Petrobras projects is in the mid-teens for gross margins. The milestone provision for contingency is expected to be released at that time.

Pipeline Strength: Five More Petrobras P-Series FPSOs

Following the P-78, STM’s Petrobras series continues with a robust pipeline:

• P-80 and P-82: Scheduled for 2027
• P-83: Scheduled for 2028
• P-84 and P-85: Scheduled for 2029

Collectively, these FPSOs will add 1.3-1.5 million barrels of oil per day for Petrobras and are expected to generate over 50,000 jobs globally. At least five additional FPSOs are anticipated to be tendered in 2025/2026, including projects for Sergipe-Alagoas Deepwater (SEAP), Albacora, P-86, and Barracuda.

Comprehensive Table: Petrobras FPSO Projects

Leveraging a Global Network for Project Execution

STM’s execution capabilities are underpinned by a global network:

• Korean Hyundai Heavy Industries built the P-78 FPSO hull and living accommodations.
• STM’s Nantong China and Brazil yards handled topside processing.
• The major turbine integration was carried out in Singapore.

Future P-series units may be of smaller value due to lower capacity and the potential adoption of the build, operate, transfer (BOT) model, with STM taking on BOT risks and subcontracting various stages.

Market Position and Investment Case

STM is classified as a large-cap, non-index stock, making it an attractive candidate for portfolios seeking diversification. The target price remains at S\$2.80, representing a 37.9% upside from the current price of S\$2.03. The target is based on a 1.5x CY25F P/BV, aligning with the company’s 10-year trading average.

Key Catalysts:

• Margin expansion
• Finalisation of MAS and CAD investigation
• Continued project execution and delivery

Risks:

• Cost overruns
• Project cancellations

Peer Comparison: Singapore and Global Shipbuilders

Below is a summary table comparing STM’s key metrics with other major players in the Singapore, China, Korea, Japan, and US shipbuilding and industrial sectors:

Seatrium’s ESG Profile: A Notable Outperformer with Areas to Watch

STM earned a C+ ESG combined score from LSEG, with strong ratings across Environmental (B), Social (B+), and Governance (B+) pillars. The company’s 2025 ESG targets include:

• 30% of turnover from sustainable products
• 100% compliance with product safety and health requirements
• Above-95% customer satisfaction
• Zero environmental harm
• Full compliance in procurement spend

STM has also made tangible progress, including avoiding 6,235 tCO2e per year through solar and LED installations. In 2024, it received a Merit in System & Management and Innovation & Design at the Singapore Environmental Achievement Awards.

MAS and CAD Investigation

STM is under investigation by the Monetary Authority of Singapore and the Commercial Affairs Department regarding potential historical offences linked to Operation Car Wash. Resolution of this probe is anticipated to improve STM’s ESG controversy score.

Financial Performance Snapshot: 2023-2027F

Financial Ratios and Key Metrics

• Operating EBITDA Margin: Improving from -15.3% in 2023 to 12.5% by 2027F
• Net Cash Per Share: Expected to turn positive at S\$0.29 by 2027F
• BVPS: Rising steadily from S\$2.05 (2023) to S\$2.20 (2027F)
• Gross Interest Cover: Rebounding from -5.46 (2023) to 3.82 (2027F)
• ROIC: Swinging from -31.0% (2023) to 10.1% (2027F)

Conclusion: Seatrium’s Outlook—Growth, Margins, and Strategic Positioning

Seatrium Ltd is positioned for a robust earnings recovery and margin expansion in 2025, underpinned by milestone Petrobras FPSO deliveries, margin recovery, and a deep project pipeline. The company’s strong global execution network, improving ESG profile, and attractive valuation (target price of S\$2.80 — 37.9% upside) support a compelling investment case, with key catalysts on the horizon including margin expansion and regulatory clarity. Investors should be mindful of risks such as cost overruns or project cancellations but, overall, Seatrium’s prospects for 2025 and beyond are bright.