Net order book would “hover around” US$16 ($20.8) billion by end of the year according to her report issued on Nov 26. With the bulk of projects from Petrobras and Tennet being series-built with staggered deliveries (presumably with staggered payments), Ho expressed concern about the company’s revenue coverage that is estimated to be less than 2x.
However, she thinks that Seatrium “will likely” win more contracts for floating, production, storage and offloading (FPSO) vessels and high voltage direct current (HVDC) stations from these two customers next year. Ho also notes that Seatrium is pursuing contracts worth $30 billion.
Despite the stock underperforming this year due to low order wins and negative developments such as Maersk’s cancellation of a wind turbine installation vessel (WTIV) order, Ho remains optimistic about Seatrium. Possible tailwinds for a re-rate include more sizeable contract wins and higher margins.
Meanwhile, Lim Siew Khee and Meghana Kande from CGS maintain their “buy” call and TP of $2.67 in their Nov 26 analysis. Their view is shaped by Seatrium’s path to profit recovery and FY2025-2027 growth forecast that is underpinned by higher margin orders.
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Their TP is calculated based on a forecasted FY2026 P/B of 1.3 times. They gave a 10% discount to the counter’s historical P/B of 1.5 times to account for lumpy contract wins.
Although the pair estimated a similar value for the Tiber FPU contract as Ho, they wrote that Seatrium has a current order book of around $17.9 billion.
Lim and Kande estimate “gross margins of 10-12%” for Tiber FPU, which will be mostly built in Singapore. This is in line with management’s guidance in previous analyst briefings of mid-teens risk adjusted project margins.
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The duo also analysed Seatrium’s potential contract wins, predicting orders of $6 billion for 2026, based on the $30 billion worth of contracts the company is pursuing. Since Seatrium is overseeing the integration/ module construction for two other FPSOs for ExxonMobil via Modec and SBM Offshore, they believe that potential contract wins include FPSO integration/ module fabrication for Modec following the final investment decision for ExxonMobil’s seventh offshore oil development in the Stabroek block in Guyana.
They note cost overruns and project cancellations to be key risks for the counter.
Seatrium shares rose six cents, or 2.9%, to close at $2.12 on Nov 26.
