Broker: UOB Kay Hian
Date of Report: 29 July 2025

Singapore Offshore Marine Sector 2025: Investment Opportunities Amid Global Slowdown

Overview: Sector Navigates Global Uncertainty with Singapore in the Lead

The offshore marine and shipping sector has entered 2025 amid significant global headwinds, marked by geopolitical tensions and evolving US trade policies. Despite a 54% year-on-year drop in newbuild orders and some softness in rig dayrates, Singapore-based players are demonstrating relative resilience and strong investment appeal. The sector retains its OVERWEIGHT rating, with several stocks offering compelling value, robust earnings prospects, and strategic positioning for industry shifts such as decarbonization and renewables.

Global Sentiment Shifts and Market Dynamics

• Slower Newbuild Activity: New shipbuilding contracts have dropped over 50% year-on-year in 1H25, reflecting caution stemming from economic and political uncertainty. Newbuilding prices have slipped slightly, with the slowdown most pronounced in car carriers, LNG carriers, and tankers.
• Green Vessels Gain Share: Despite the downturn, 55% of new orders are for alternative fuel-capable vessels, signaling ongoing commitment to decarbonization.
• US Trade Policy Watch: Landmark orders, like Hanwha Philly’s LNG carrier (the first at a US yard since the 1970s), include significant overseas construction, highlighting practical challenges for US-centric trade strategies.

Offshore Rigs: Mixed Performance in 2025

• Dayrates and Utilization: While leading-edge rig dayrates in Asia stabilized in 2Q25, broader market softness is evident, particularly for high-spec jack-ups in Southeast Asia and ultra-deep floaters in the Gulf of Mexico. Year-on-year, jack-up and drillship dayrates rose 6–25%, but utilization has plateaued.
• Semi-submersibles Underperform: Utilization is only marginally higher, with dayrates down 1.1% year-on-year. New rig order flows are likely more than 12 months away.

Top Singapore Offshore Marine Stock Picks

Company Analysis and Earnings Outlook

Keppel Ltd (KEP SP)

• Target Price: S\$9.25 (BUY)
• 2025F PE / P/B: 15.9x / 1.4x
• Key Catalysts: Potential rig asset sales, asset recycling updates, and over S\$0.5b in real estate transactions previewed in 1Q25.
• Earnings Strength: 1Q25 net profit up 25% YoY, driven by stable infrastructure, asset management, and improved real estate. 66% of Singapore contracted generation capacity locked in for three years or more, providing earnings stability.

Sembcorp Industries (SCI SP)

• Target Price: S\$8.00 (BUY) based on 13.6x PE (1.5SD above 2018–24 avg. ex-2020)
• Key Drivers: Disciplined pivot toward sustainable growth with robust execution in renewables, energy infrastructure, and conventional assets. Recent Senoko stake and India renewables projects boost earnings and regional presence.
• Outlook: SCI now trades at a 5% premium to regional peers but remains attractive after a 20% rally in three months. Watch for continued dividend growth and updates on renewables.

Seatrium (STM SP)

• Target Price: S\$2.96 (BUY) based on 1.5x P/B (1.5SD above five-year average)
• 2025F PE / P/B / ROE / Yield: 21.4x / 1.2x / 4.5% / 1.1%
• Operational Momentum: 1Q25 saw delivery of ExxonMobil’s FPSO, steady repair projects, and robust execution of a S\$21.3b orderbook. The recent Floating Storage Regasification Unit win enhances revenue visibility.
• Upcoming Catalysts: Potential conclusion of MAS/CAD investigation and margin guidance for 1H25.

Yangzijiang Shipbuilding (YZJSGD SP)

• Target Price: S\$3.29 (BUY) based on 9.0x PE (2SD above five-year avg.)
• 2025F PE / P/B / ROE / Yield: 6.8x / 1.3x / 25.0% / 4.1%
• Performance: Stock up 26% since May, still inexpensive vs. regional peers. Orderbook visibility stretches to 2028.
• Strategic Strength: Strong track record for safe, efficient shipbuilding. Korean peers trade at higher P/B but lower ROE (14.4–18.0%).
• Upcoming Focus: New order wins, margin sustainability, and capacity expansion.

Marco Polo Marine (MPM SP)

• Target Price: S\$0.066 (BUY)
• 2025F PE / P/B / ROE / Yield: 7.0x / 1.0x / 13.4% / 3.4%
• Growth Prospects: Positioned for potential charter rate upside from 4Q25 onward.

Peer Comparison: Key Financial Metrics

*Fiscal year ending 30 Sep; averages for Singapore-listed shipyards: 2025F PE 11.7x, P/B 1.2x, ROE 14.3%.

Earnings Preview: Optimism Amidst Caution

Despite cautious signals from global oilfield majors and a lackluster 2Q25 for US energy services, Singapore’s large-cap industrials are projected to show year-on-year profit growth in 1H25.

*Net profit of S\$504m excluding legacy assets.

Key Reporting Dates and Catalysts to Watch

Industry Risks and Challenges

• Delays in project sanctioning due to supply chain issues
• Financing shortages for fossil fuel-related industries
• Risk of global recession and lower sector capex
• Negative sentiment from ongoing trade and tariff proposals

Rig Market Trends: Utilization, Dayrates, and Fleet Status

• Significant Increase in Warm-Stacked Rigs: In response to lower oil prices, warm-stacked jack-ups are up 138%, while cold-stacked semi-subs are down 19%. Drillships show a 38% increase in warm-stacked units.
• Global Rig Availability: Only 7.4% of total rigs are readily available. Of 698 rigs, 458 are on contract, with the rest distributed among future contracts, uncontracted supply, under construction, cold/warm stacked, repairs, or uncompetitive status.
• Dayrate and Utilization: Utilization and dayrates for both semisubmersibles and drillships show cyclicality but have plateaued or softened recently, reflecting market caution and oversupply in some segments.

Guidance from Oil Majors and Oilfield Services Companies

Conclusion: Singapore’s Marine Sector Stands Out in Uncertain Waters

Despite a sluggish global outlook and ongoing geopolitical friction, Singapore’s offshore marine sector is charting a confident course through 2025. With robust orderbooks, strong balance sheets, and a pivot to renewables and green shipping, sector leaders like Keppel, Sembcorp Industries, Seatrium, Yangzijiang Shipbuilding, and Marco Polo Marine remain attractive investment options. Investors should watch upcoming earnings, sector margin trends, and strategic developments for signals on the next phase of growth.