By doing so, Seatrium is seen to have finally put to rest a multi-year overhang on its share price, even as it grapples with the industry cycles.
In its revised FY2023 income statement following the DPA, Seatrium has reported a loss of $2.03 billion for the year ended Dec 31 2023 instead of $1.95 billion reported earlier, a large chunk of which can be attributed to impairment and provisions.
After factoring in the DPA, Seatrium's NAV will be slightly trimmed by 1.2%.
In her April 1 note, Lim says that Seatrium’s share price has underperformed year-to-date, following an order cancellation and "substantial kitchen-sinking" in its FY2023 numbers.,
"We see the announcement as a positive development that lifts the overhang on the stock, though share price may continue to trade sideways in the near term," says Lim.
At the coming AGM, Seatrium shareholders will be asked to approve a 20-to-1 share consolidation, which Lim believes can help reduce some share price volatility.
In her view, the company's coming 1HFY2024 results may be an "important signpost" for investors to gauge the management’s ability to execute and secure new orders at reasonable gross margins.
See also: UOBKH raises TP on SIA to $6.22, FY2026 earnings to see lift on fuel cost savings
Lim's new fair value estimate is now 15.5 cents, down from 16 cents, to factor in the adjustment to NAV following the DPA.
As at 10.40 am, Seatrium shares changed hands at 8.6 cents, down 1.15%.
