Seatrium - DBS Research 2024-02-27: Despite Write-Downs, Do Not Write-Off

• Seatrium (SGX:S51) reported a net loss of S$1.7bn for 2H23, bringing its full-year loss to S$1.94bn. This is much higher than the expectation of a S$500- 600m net loss for FY23 due to massive non-cash write-downs of S$1.4bn for non-core assets and obsolete inventories arising from a strategic review; and S$0.6bn in provisions for onerous contracts, legal and corporate claims (largely the Brazil in-principle settlement), and merger-related expenses.

But encouraging operating performance with interim profitfor the first time since 2018

• - Read this at SGinvestors.io -

Any further provision and impairment risks?

• - Read this at SGinvestors.io -

Slowly but surely; bottoming out from here

• 2023 is a transition year for Seatrium. Tremendous improvement in operations has been achieved this year, delivering over 50% y-o-y growth from FY22 combined revenue and strong positive EBITDA of S$628m.
• A more prominent earnings turnaround could be expected from 2024 onwards, with integration synergies and improved productivity.

Order wins of ~S$4.5bn in FY23, resulting in net orderbook of S$16.2bn.

• Read more at SGinvestors.io.

Pei Hwa HO DBS Group Research | https://www.dbs.com/insightsdirect/ 2024-02-27 SGinvestors.io

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