- Seatrium (SGX:S51) won over S$5.3bn new contacts year-to-date, based on our estimates, making up 88% of our full year assumption of S$6bn, ahead of expectations. This lifts the orderbook to ~S$20bn (39% renewable/cleaner energy solutions), providing good revenue visibility for the next 3 years.
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- Management remains tight-lipped about margin assumption and guidance though they are optimistic on a turnaround given the higher activity level, integration synergies and favourable industry momentum.
- Seatrium has reviews all its projects. If executed well, they should accrete positively to the bottomline. Projects are assessed based on return and risks, not on a fixed margin.
Possibly double-digit margins and ROE?
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- In our forecast period, we project revenue to grow from S$5.4bn towards S$8.2bn by FY25F with net margin recovering from a small deficit to 6.8% by FY25F, achieving ROE of ~6.6%. There could be upside to our assumptions on both revenue and margins, in the event of better-than-expect contract wins and project execution.
- Seatrium could resume dividend payout post earnings turnaround, paying out 30-40% earnings, in our view. This translates to 1-3% dividend yield based on our FY23-24F earnings.
Order outlook is greener and rosier than ever. Seatrium has room for more orders...
- Read more at SGinvestors.io.
