UOB Kay Hian
Date of Report: 07 July 2025

Seatrium Ltd: Anchoring Market Leadership with Expanding Orderbook and Robust Profit Growth

Overview: Strong Performance and Promising Outlook

Seatrium Ltd (STM SP) stands out as a global leader in integrated shipyard and engineering solutions, serving the offshore oil & gas and renewables sectors. Following its 2023 merger with Keppel Offshore Marine, Seatrium has continued to deliver on high-value, specialized projects, cementing its reputation for timely execution and strategic diversification.

Key Investment Highlights

• BUY recommendation maintained with a target price of S\$2.96, representing a potential upside of 43% from the current price of S\$2.07.
• Market capitalization: S\$6.94 billion (US\$5.37 billion).
• Orderbook: S\$21.3 billion, with revenue visibility extending to 2031.
• Strong execution: On-schedule and on-budget delivery of major projects, including the Petrobras P-78 FPSO.
• Expansion into renewables: S\$7.1 billion of orderbook related to renewables and cleaner energy solutions.
• Major shareholder: Temasek Holdings with a 35.87% stake.

Recent Operational Achievements

Timely Delivery of Petrobras P-78 FPSO

Seatrium recently celebrated the successful sailaway of Petrobras’ P-78 Floating Production Storage and Offloading (FPSO) vessel from its Benoi yard. This US\$2.3 billion project, awarded in 2021, is among the largest FPSOs globally, boasting:

• Production capacity: 180,000 barrels per day
• Gas handling: 7.2 million cubic metres per day
• Storage: 2 million barrels

The P-78 will soon be deployed in Brazil’s Buzios field, the world’s largest deepwater oil field. Seatrium’s ability to deliver such complex assets on time and within budget demonstrates its execution excellence and strengthens its prospects for winning additional specialized projects.

Securing New FSRU Conversion Contracts

On 4 July 2025, Seatrium secured a new contract with Kinetics to convert a 67,000 dwt LNG carrier into a Floating Storage Regasification Unit (FSRU). Estimated at US\$250–350 million, this project involves:

• Installation of a regasification module
• Spread-mooring system
• Integration of cargo handling, offloading, utility, electrical, and automation systems

Seatrium is concurrently executing two other FSRU conversions for Kinetics, with deliveries set for 4Q25 and 1Q26. Additionally, the company recently won another FSRU conversion contract from Norway’s Höegh Evi, valued at US\$250–400 million and set to commence in late 1H25.

Financial Performance and Projections

Upcoming First Half 2025 Results

Seatrium is expected to announce its 1H25 results on 31 July, with the following forecasts:

• Revenue: S\$4.1 billion (+2% year-on-year, -21% half-on-half)
• Net profit: S\$145 million (+303% year-on-year, +20% half-on-half)
• Gross margin expansion: Anticipated at 3.5% (up from 2.7% in 2H24)

Management’s guidance suggests no expected impairments or cost overruns for the period.

Key Financials (S\$ million unless stated)

Positive EBITDA and Cash Flow Momentum

Seatrium has demonstrated a significant turnaround in profitability, with positive EBITDA since 2024 and a strong cash position forecast to reach S\$4.13 billion by end-2027. Net debt to equity is projected to decline from 10.9% in 2024 to a net cash position (negative net debt) by 2027.

Strategic Market Position and Growth Drivers

Competitive Edge in High-Value Offshore Projects

Seatrium’s track record in delivering complex, large-scale projects on time and within budget has solidified its position as a global leader in offshore production and repair. Its expertise is reflected in its expanding orderbook and growing reputation among top-tier clients in oil & gas and renewables.

Expansion into Renewables and Clean Energy

The company’s commitment to sustainability is evident, with S\$7.1 billion of its orderbook dedicated to renewables and cleaner solutions. This diversification underpins long-term revenue visibility and positions Seatrium as a key player in the global energy transition.

US Yard Operations: Limited Impact for Now

While Seatrium’s US yard in Brownsville, Texas, initially raised expectations for new order wins, several challenges in the US industrial landscape—such as skilled labor shortages, high labor costs (>US\$70/hour), and unpredictable federal policies—have tempered near-term prospects. The US operations are expected to only marginally contribute to contract wins in the short to medium term.

Orderbook and Revenue Visibility

Robust Multi-Year Orderbook

• As of end-1Q25, net orderbook stands at S\$21.3 billion, up from S\$20.7 billion a year earlier.
• Includes significant projects in renewables and clean energy, underpinning revenue through 2031.
• Recent contract wins, such as the FSRU for Höegh Evi and ongoing projects for Kinetics, signal strong order intake momentum.

New Order Wins by Year (S\$ million)

Valuation and Share Price Catalysts

Valuation

• BUY rating reaffirmed with a target P/B multiple of 1.5x, which is 1.5 standard deviations above the five-year average.
• High valuation justified by Seatrium’s global competitive position, revenue visibility, and potential for further order wins in 2025.

Potential Share Price Catalysts

• Completion of ongoing MAS/CAD investigations.
• New orders for rigs, offshore renewables, or fabrication works.
• Repairs and upgrades of cruise ships and commercial vessels.
• Changes in US regulations that could drive demand for repairs and upgrades at US yards.

Conclusion: Outlook Remains Bright for Seatrium

Seatrium’s consistent delivery of high-value, complex projects, expanding orderbook, and strategic diversification into renewables have positioned it as a global industry leader. With strong financials, robust revenue visibility, and multiple catalysts on the horizon, Seatrium is well placed for sustained growth. The BUY recommendation and target price of S\$2.96 reflect the company’s strengthening fundamentals and compelling investment case.

Disclosures

This article is based exclusively on the research and analysis provided by UOB Kay Hian as of July 7, 2025.