Seatrium - CGS-CIMB Research 2024-01-30: Toning Down Our Profit Expectations

Seatrium - Toning Down Our Profit Expectations

Seatrium (SGX:S51) | SGinvestors.ioSeatrium (SGX:S51)
  • Post-completion of a strategic review of its operations, Seatrium announced on 30 Jan that it plans to write down surplus non-core assets and inventories. While it anticipates operational and financial performance to continue to improve, Seatrium expects FY23F net loss to be significantly higher than FY22. See earnings calendar.
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We expect ~S$250m of write-downs in 2H23F

  • Recall that in 1H23, Seatrium provided S$231m for merger expenses and higher labour and contract costs for projects in its US yard. For 2H23F, we have now penned in S$250m for the potential closure of fully depreciated yards (such as Crescent, Benoi and Tuas), inventory and PPA impairment, as well as cost overrun provisions.
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Toning down our expectation on margin

  • We now expect gross margins of 5.5%/10% for Seatrium in FY24F/25F (previously 8.0%/13%).
  • We understand that projects clinched post-merger, including Tennet HVDCs, as well as Petrobras projects awarded pre-merger (P78, P80, P82 and P83), were contracted on double-digit gross margins. However, contracts secured by Seatrium and Keppel Offshore and Marine pre-COVID may still face tail-end challenges, including higher labour and supply chain costs not previously factored in, resulting in gross losses.

Toning down expectation on recovery pace too

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Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LIM Siew Khee CGS-CIMB Research | 2024-01-30

Previous report by CGS-CIMB:
2024-01-04 Seatrium - Project Cancelled, But Still An ADD.

Price targets by 4 other brokers at Seatrium Target Prices.

Listing of research reports at Seatrium Analyst Reports.

Relevant links:
Seatrium Share Price History,
Seatrium Announcements,
Seatrium Dividends & Corporate Actions,
Seatrium News Articles


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