DBS Group Research has reiterated its ‘Buy’ recommendation for Seatrium Limited, highlighting the company’s robust performance in the first half of 2025. Seatrium, a leader in offshore engineering, reported a core gross margin expansion to 8.2%, a significant improvement from 3.6% in the second half of 2024. This margin growth is attributed to operational enhancements and a focus on higher-margin projects.
The company, formed from the merger of Keppel Offshore & Marine and Sembcorp Marine in March 2023, is on track to achieve annual cost savings of $220 million (SGD300 million) by the end of 2025. Seatrium aims to grow its revenue at a compound annual growth rate of 7%-10% to reach $7.3-8.8 billion (SGD10-12 billion) by 2028, supported by a strong order book exceeding $13.2 billion (SGD18 billion) and increasing demand for oil, gas, and renewable infrastructure.
Despite a slow order flow year-to-date, Seatrium remains optimistic about securing new contracts, with a pipeline valued at $22 billion (SGD30 billion). The company is also building capabilities in carbon capture and storage, which could serve as a long-term growth engine. DBS has adjusted its price target for Seatrium slightly down to $2.17 (SGD2.96), reflecting earnings revisions.
Key risks include potential drops in oil prices and integration challenges. However, the conclusion of investigations by the Monetary Authority of Singapore and the Commercial Affairs Department, with no further action against Seatrium, removes a significant overhang from past legal issues. As Seatrium continues to execute its strategy, contract wins will be crucial in driving future growth.
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