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Seatrium (SGX:5E2) delivered a solid 1Q26 business update with guidance for higher gross margins due to a better project mix and completion of non-core divestments.
Showing a leaner, higher-margin business...
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Importantly, Seatrium stated that it is now witnessing “mid-teens” margins after its merger with Keppel Offshore Marine, a significant improvement from the loss-making years that defined the previous decade. This is the result of its project mix that now skews towards higher margin projects with legacy project exposure, once a persistent drag, now reduced to roughly 1% of the orderbook. As a result, there may be upside to our 2026 gross margin estimate of 7.5% (2024: 7.4%).
… as operating costs ameliorate.
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We note that the series-build nature of a meaningful portion of Seatrium’s orderbook also generates significant learning-curve savings, on our estimates, thus supporting the margin expansion trajectory that management has guided for.
Geopolitical disruption and the Hormuz effect.
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