CGS International
Report Date: September 23, 2025

Seatrium’s Strategic Shift: US Yard Sale, Cost Discipline, and ESG Execution Signal Profitable Turnaround

Introduction: Seatrium Ltd’s Latest Moves Signal a New Era

Seatrium Ltd (STM), a key player in the Singapore offshore and marine sector, is making waves with its recent decision to divest its US-based AmFELS yard. This bold move, combined with sharp cost controls, improved order discipline, and robust ESG commitments, positions the company for a core profit turnaround. This in-depth analysis, based on the latest broker report from CGS International, explores every angle of Seatrium’s operations, financials, peer comparison, and ESG credentials.

Strategic Divestment: AmFELS Yard Sale Boosts Seatrium’s Outlook

Seatrium has announced the divestment of its AmFELS Yard in Brownsville, Texas, selling it to Karpower Valley LLC for S\$65 million – notably above the yard’s book value of approximately S\$39 million as of June 30, 2025. The transaction will see S\$50 million paid one year post-closing, with gains estimated at S\$26 million, to be recognized progressively.
Key implications of the divestment:
The yard, challenged by persistent labor shortages and escalating costs post-Covid-19, will no longer burden STM’s operational expenses.
Operating expenses are expected to drop by S$20 million annually from FY26 onward.
STM will retain a US presence via technology centers in Houston and a service hub in Vicksburg.
Positive financial trajectory:
All ongoing projects at AmFELS are targeted for completion by end-2025.
Gains from the sale will be recognized gradually, supporting future profitability.

Legacy Projects Progress: Charybdis and Frederick Paup Approaching Completion

Two legacy projects at AmFELS are nearing the finish line: – **Charybdis (WTIV for Dominion Energy):** Arrived in Virginia in September 2025, set to begin installations for the Coastal Virginia Offshore Wind project by end-September. – **Frederick Paup (Dredger for Manson Construction):** Currently in final dock and sea trials, expected to be delivered by early 2026.
The conclusion of these projects, both initially delayed, is crucial for reducing STM’s provisions for onerous contracts, which have stabilized at around S$43 million recently.

Financial Highlights: Profit Turnaround in Focus

STM’s financial performance is forecasted to improve considerably. The company’s bottom line, previously impacted by contract provisions, is expected to benefit from improved execution, margin expansion, and the AmFELS divestment.

Key observations:
Revenue growth is projected at 9% for FY25, slowing to 7% in FY26 before a slight decline in FY27.
Net profit and ROE are expected to rise steadily, reflecting turnaround momentum and margin improvements.

Order Book & Pipeline: Conservative Wins, Robust Prospects

As of 1H25, STM’s year-to-date order wins are under S\$1 billion, with a net order book standing at S\$18.6 billion. Management highlights a S\$30 billion pipeline, split between S\$19 billion in oil & gas and S\$11 billion in offshore wind projects.
Key updates:
FY25 order win target is revised down to S$3 billion (from S$4 billion) for conservatism.
Major ongoing and prospective projects include:
P-86 FPSO: Tender cancelled by Petrobras for cost optimization.
SEAP 1 & 2 FPSOs: Likely awarded in 2026, bids closing September 2025.
Tiber floating production unit: Awaiting BP’s final investment decision by late-2025.
Offshore wind projects: STM is bidding in Taiwan and Europe.

Peer Comparison: STM in the Competitive Landscape

STM’s valuation, profitability, and growth outlook are benchmarked against regional and global peers in offshore & marine, shipbuilding, and industrial conglomerates.

Peer snapshot:
STM’s P/E is higher than regional peers but supported by a strong turnaround in earnings growth.
Dividend yield is modest, reflecting the focus on reinvestment and balance sheet strength.

ESG Focus: Seatrium’s Commitment to Sustainability

STM scores a C+ in LSEG’s ESG combined score, with ambitious 2025 targets: – 30% of turnover from sustainable products – 100% compliance with product safety and health standards – Customer satisfaction above 95% on all projects – Zero environmental harm – 100% supplier compliance with STM’s Code of Conduct
Sustainable Finance Framework:
STM enhanced its Sustainable Finance Framework in 2024, integrating stricter KPIs and taxonomy alignment. Over S$400 million in green financing was secured for decarbonization and clean technology R&D.
Social and Governance Leadership:
STM leads its peers in social and governance pillars, boasting:
An audited HSE management system with zero cases of noise-induced deafness in 2024
ISO 37001 Antibribery certification
No material incidents of noncompliance or legal actions
Environmental Progress:
STM has a target to avoid 15,000 tCO2e annually by 2025, with 6,235 tCO2e already avoided via solar and LED installations. Recognition at the 25th Singapore Environmental Achievement Awards 2024 underlines its innovation capabilities.

Historical Context: AmFELS Yard’s Journey

The AmFELS yard, established in 1971, has seen multiple ownerships and served as a critical rig-building hub for the Americas. Since Covid-19, the yard suffered from a shortage of skilled labor, with regional competition (notably from SpaceX) exacerbating the challenge. The divestment enables STM to focus on higher-margin, less labor-constrained opportunities while maintaining a US tech and service presence.

Valuation and Recommendation

CGS International maintains an “Add” recommendation for STM, with a target price of S\$2.80, representing a 15.2% upside from the current price of S\$2.43. The valuation is anchored on 1.5x CY25F P/BV, aligned with STM’s 10-year average.
Key re-rating catalysts:
Successful cost control and margin improvement
Securing sizeable order wins
Downside risks:
Potential cost overruns
Project cancellations

Conclusion: Seatrium Embarks on a Profitable, Sustainable Future

With its strategic divestment, execution on legacy projects, disciplined order approach, and strong ESG framework, Seatrium Ltd is poised for a profit turnaround and sustainable growth. Its competitive positioning, improved financials, and robust governance make it a stock to watch for investors seeking exposure to the offshore and marine sector’s next phase of evolution.