UOB Kay Hian
Date of Report: Thursday, 28 August 2025
Seatrium Ltd: Arbitration, Orderbook Strength, and Regional Yard Comparisons Drive Investment Case
Introduction: Seatrium’s Position in the Offshore & Marine Sector
Seatrium Ltd, following its merger with Keppel Offshore & Marine in 2023, stands as an integrated shipyard powerhouse providing engineering solutions for the offshore oil & gas and renewables industries. The company is in the spotlight due to a recent arbitration with Keppel Corp over legacy liabilities, but continues to deliver robust order wins and has a bullish outlook across key growth sectors.
Key Highlights at a Glance
- Share Price: S\$2.29
- Target Price: S\$2.96 (29.3% upside)
- Market Cap: S\$7.75 billion
- Major Shareholder: Temasek Holdings (35.87%)
- Orderbook: S\$18.6 billion as of 1H25
- Revenue Visibility: Projects scheduled through 2031
- FY25F P/E: 27.0x
- Dividend Yield (2025F): 1.1%
Arbitration: A Manageable Overhang from Keppel Corp
Seatrium faces arbitration from Keppel Corp over a S\$68.4 million claim tied to Brazil’s Operation Car Wash. The dispute centers on indemnity obligations related to the 2023 merger. Seatrium had previously provisioned S\$82.4 million for this risk, but reversed the provision after its 24-month indemnity expired in February 2025 and before any legally binding agreements were signed with Brazilian authorities. The arbitration will be held in Singapore, though the timing remains undecided. Management views the overhang as quantifiable and considerably less significant than previous investigations.
Orderbook Momentum: New Contracts Fuel Growth
August proved fruitful for Seatrium, with over S\$300 million in new contracts for powerships, FSRUs (Floating Storage Regasification Units), and FLNG (Floating Liquefied Natural Gas) vessel upgrades. Notable deals include:
- Karpowership (Turkey): Integration of four powerships at Seatrium’s Singapore yard, with options for two more. Estimated contract value is around S\$50 million per vessel, beginning 1Q27. The deal also covers conversion, life extension, and repair of three LNG carriers into FSRUs.
- Golar LNG: Seatrium will upgrade the FLNG Hilli Episeyo, with the project valued at approximately S\$100 million and commencing in 3Q26.
These wins strengthen Seatrium’s robust S\$18.6 billion net orderbook, which spans 25 projects with deliveries extending into the next decade.
Financial Performance and Outlook
| Year (S\$m) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
7,291 |
9,231 |
8,185 |
8,219 |
8,703 |
| EBITDA |
(1,116) |
627 |
817 |
901 |
931 |
| Operating Profit |
(1,573) |
212 |
308 |
390 |
399 |
| Net Profit (Adj.) |
(1,940) |
157 |
289 |
385 |
439 |
| EPS (S\$ cent) |
(2.8) |
4.6 |
8.5 |
11.3 |
12.9 |
| P/E (x) |
n.a. |
49.9 |
27.0 |
20.3 |
17.8 |
| P/B (x) |
22.0 |
1.2 |
1.2 |
1.1 |
1.1 |
| ROE (%) |
(37.9) |
2.4 |
4.5 |
5.7 |
6.2 |
| Dividend Yield (%) |
0.0 |
0.7 |
1.1 |
1.5 |
1.7 |
Strategic Focus: Energy Transition and Growth Pipeline
Seatrium’s S\$30 billion near-term pipeline spans oil & gas, offshore wind, and maritime solutions. The company is executing a balanced growth strategy, with 34% of its orderbook anchored in renewables and clean energy. Investments in carbon capture, ammonia bunkering, and other decarbonisation technologies demonstrate a commitment to capturing the upside from the global energy transition.
Valuation: Premium Justified by Market Position
The broker maintains a BUY recommendation, with a price target of S\$2.96 based on a 1.5x P/B multiple—1.5 standard deviations above Seatrium’s five-year average. This premium reflects:
- Seatrium’s global competitive position as a specialist asset builder
- Visibility of revenues out to 2031
- Prospects for further order wins throughout 2025
While the arbitration overhang exists, it is considered manageable compared to past headline risks.
Key Share Price Catalysts
- New orders for rigs, offshore renewables, or vessel conversions
- Repairs and upgrades for cruise ships and commercial vessels
- Changes in US regulations that boost yard demand in the US
Comparative Analysis: Seatrium vs. Regional Peers
| Company |
Ticker |
Rec. |
Price (lcy) |
Target |
Upside (%) |
Mkt Cap (US\$m) |
PE 2025F |
PE 2026F |
P/B 2025F |
P/B 2026F |
EV/EBITDA 2025F |
EV/EBITDA 2026F |
ROE 2025F (%) |
Yield 2025F (%) |
| Seatrium |
STM SP |
BUY |
2.29 |
2.96 |
29.3 |
6,019 |
27.0 |
20.3 |
1.2 |
1.1 |
11.1 |
10.0 |
4.5 |
1.1 |
| YZJ Shipbuilding |
YZJSGD SP |
BUY |
2.93 |
3.29 |
12.3 |
8,951 |
8.2 |
7.7 |
1.8 |
1.5 |
5.0 |
4.6 |
25.0 |
3.6 |
| Marco Polo Marine* |
MPM SP |
BUY |
0.071 |
0.088 |
23.9 |
207 |
10.2 |
8.4 |
1.3 |
1.2 |
6.9 |
5.6 |
13.4 |
2.8 |
| Average – Singapore |
– |
15.1 |
12.1 |
1.4 |
1.3 |
7.7 |
6.8 |
14.3 |
2.5 |
| Hanwha Ocean Co |
042660 KS |
NR |
110,900 |
107,689 |
(2.9) |
24,323 |
36.5 |
28.4 |
5.9 |
4.9 |
25.4 |
21.6 |
17.5 |
0.0 |
| Samsung Heavy Ind |
010140 KS |
NR |
22,000 |
23,633 |
7.4 |
13,857 |
31.8 |
20.1 |
4.2 |
3.5 |
20.5 |
14.2 |
14.6 |
0.1 |
| HD Korea Shipbldg |
009540 KS |
NR |
369,500 |
456,331 |
23.5 |
18,718 |
11.9 |
8.8 |
2.0 |
1.7 |
5.5 |
4.3 |
18.2 |
2.5 |
| China State Shipbldg |
600150 CH |
NR |
36.54 |
41.50 |
13.58 |
22,821 |
21.8 |
15.5 |
2.9 |
2.5 |
12.9 |
9.6 |
13.4 |
1.8 |
| CSSC O&M Eng |
600685 CH |
NR |
28.43 |
n.a. |
n.a. |
4,465 |
41.2 |
26.1 |
n.a. |
n.a. |
n.a. |
n.a. |
5.2 |
n.a. |
| Average – Sector |
– |
20.2 |
15.2 |
2.5 |
2.1 |
12.1 |
9.8 |
15.0 |
1.9 |
Observations:
- Seatrium’s P/E and P/B are higher than its Singapore peers, reflecting its transitional phase and orderbook strength.
- YZJ Shipbuilding shows market-leading ROE.
- Hanwha, Samsung, and Chinese yards, while large in market cap, generally trade at higher P/B and lower dividend yields, reflecting differing business models and risk profiles.
Conclusion: Investment Case for Seatrium Remains Strong
Seatrium combines a robust orderbook, a clear transition to renewables, and a strong competitive position in the offshore & marine sector. The arbitration with Keppel Corp is a quantifiable risk, but the company’s S\$18.6 billion orderbook and S\$30 billion pipeline provide multi-year revenue visibility and potential catalysts for share price appreciation. The broker maintains a BUY rating with a S\$2.96 target, reflecting confidence in Seatrium’s strategic growth, operational execution, and ability to capture upside from energy transition trends.
For investors seeking exposure to the evolving offshore and energy infrastructure landscape, Seatrium stands out as a compelling play with both defensive and growth attributes.
