UOB Kay Hian
Date of Report: Thursday, 28 August 2025
Seatrium Ltd: New Contracts Drive Growth Despite Arbitration Overhang

Overview: Seatrium’s Position in Offshore & Marine Engineering

Seatrium Ltd stands out as an integrated shipyard powerhouse, delivering one-stop engineering solutions for the offshore oil & gas and renewables industries. Following its strategic merger with Keppel Offshore Marine in Q1 2023, Seatrium has solidified its market presence, offering a diversified portfolio that spans traditional offshore projects and innovative decarbonization solutions.
Share Price: S$2.29
Target Price: S$2.96
Implied Upside: 29.3%
Recommendation: BUY (Maintained)
Market Cap: S$7.75 billion (US$6.02 billion)
Major Shareholder: Temasek Holdings (35.87%)

Arbitration Developments: Keppel Dispute Casts a Shadow

A significant development emerged in August 2025 as Keppel (KEP) initiated arbitration proceedings against Seatrium for S$68.4 million (US$53.3 million), related to Brazil’s Operation Car Wash. The backdrop involves a prior indemnity agreement as part of the 2023 merger, with Seatrium obligated to indemnify Keppel for up to 24 months post-merger—expiring 28 February 2025.
Key points:
In 2023, Seatrium had provisioned S$82.4 million for this indemnity.
The provision was reversed in 2024 results after the indemnity period lapsed without legally binding agreements from Brazilian authorities.
Arbitration will be held in Singapore; timing remains unannounced.
While this arbitration introduces a quantifiable overhang, the risk is deemed manageable and much less severe than the recently concluded MAS/CAD investigation.

Contract Wins: Expanding Orderbook and Revenue Visibility

Despite legal distractions, Seatrium secured over S$300 million in new contracts in August 2025, reaffirming its operational momentum:
Karpowership (Turkey): Selected Seatrium to integrate four floating power plants (powerships) at its Singapore yard, with options for two more. With hulls and equipment supplied by Karpowership, the contract value is estimated at S$50 million per vessel. Work commences in 1Q27.
The agreement includes conversion, life extension, and repairs of three LNG carriers into floating storage regasification units (FSRUs).
Golar LNG: Awarded Seatrium a contract to upgrade the FLNG Hilli Episeyo vessel. Estimated value: S$100 million, with work starting in 3Q26.

Robust Orderbook and Pipeline: Long-Term Growth Prospects

Seatrium’s growth story is underpinned by a strong S$18.6 billion net orderbook as of 1H25, spanning 25 projects with deliveries through 2031. This provides substantial multi-year revenue visibility.
Approximately S$6.3 billion (34%) is anchored in renewables and clean energy, reflecting Seatrium’s pivot towards offshore wind and low-carbon infrastructure.
The company is actively pursuing a S$30 billion near-term pipeline of opportunities in oil & gas, offshore wind, and maritime solutions.
Management’s focus is on converting this pipeline into orders, leveraging relationships and delivery reliability.
Seatrium is also investing early in carbon capture, ammonia bunkering, and clean energy solutions to capitalize on the global energy transition.

Financial Performance and Projections

Seatrium’s financials reflect a turnaround from prior-year losses to a trajectory of rising profitability and cash generation. The following table summarizes key financial metrics:

Key highlights:
Revenue is forecasted to remain robust, growing from S$7.3 billion in 2023 to S$8.7 billion by 2027.
Net profit is projected to rise steadily, with margins improving as the orderbook shifts towards higher-value and renewables projects.
Balance sheet strength is expected to improve, with net debt dropping sharply by 2027.

Valuation and Recommendation: Why the Upside Remains Attractive

UOB Kay Hian maintains a BUY recommendation for Seatrium, with a target price of S$2.96 based on a price-to-book (P/B) multiple of 1.5x—1.5 standard deviations above the five-year average. This premium is justified by:
Seatrium’s global leadership in specialist asset building within offshore marine.
Increasing revenue visibility through 2031.
The potential for further order wins as global energy transition accelerates.

Share Price Catalysts: What Could Drive Further Upside?

New orders for rigs, offshore renewable installations, or vessel-conversion contracts.
Expansion of repair and upgrade activity, especially for cruise ships and commercial vessels.
Regulatory changes in the US that could boost demand for repairs and upgrades of US-built assets, benefiting Seatrium’s US yards.

Comparative Analysis: How Seatrium Stacks Up Against Peers

Seatrium’s valuation and performance were benchmarked against regional peers in Asia:

*Note: Marco Polo Marine’s market capitalization is considerably smaller, but remains a relevant regional peer.

Conclusion: Seatrium’s Investment Thesis Remains Strong

Seatrium’s ongoing transformation, robust orderbook, and expanding presence in the renewables and decarbonization space position it as a compelling investment in the offshore and marine sector. While legal risks from the KEP arbitration remain, they are quantifiable and dwarfed by the company’s multi-year growth drivers. Investors should watch for new contract wins and regulatory catalysts as potential share price drivers through 2025 and beyond.