Seatrium - DBS Research 2025-02-24: Slowly But Surely

• 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.
• - Read this at SGinvestors.io -

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.
• - Read this at SGinvestors.io -
• 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.

• Read more at SGinvestors.io.

Pei Hwa Ho DBS Group Research | https://www.dbs.com/insightsdirect/ 2025-02-24 SGinvestors.io

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