Seatrium’s 2H24 reported net profit of S$121mil was broadly in line with our and consensus’ estimates. However, results were aided by write-backs.
Core net profit came in at S$85mil (adjusted for writeback for Keppel (SGX:BN4) indemnity S$82.4mil, offset by Legal and Corporate Claims – S$65mil and tax impact), falling short of our S$125mil estimate.
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Commendable FY24, marking first profitable year since 2017; though 2H24 core profit below.
Management attributed the higher revenue and lower margins to the initial recognition of several big projects (such as Petrobras FPSOs - P84, P85 as well as Kaskida FPU) which incurred higher initial works and procurement at little profit margin.
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We also note that it is admirable for new management team to drive the operational integration, ensure smooth project execution and achieve cost synergies as well as interest cost savings.
We have lowered our FY25-26F earnings forecast for Seatrium by 10-14%, factoring in lower gross margins of 7% and 9% (from 10% and 12% previously) respectively, partially mitigated by 13%/10% increase in revenue projection.
Recovery track intact; robust order pipeline.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
