According to the CEO, the group is likely to meet its FY2028 targets based on its current order book, operational efficiencies, costs, divestments of its non core assets and running costs.
“All these factors have always been in play… and I think [we’re] firing on all cylinders, we will be able to meet our FY2028 target,” he says.
For the 3QFY2025, Seatrium’s net order book stood at $16.6 billion which comprised 24 projects with deliveries extending through 2031. The group had completed two projects and is on track to deliver three more by the end of the year.
New orders were mostly from returning customers, including the upgrading of FLNG (floating liquefied natural gas) Hilli Episeyo and a series of repairs and upgrades projects.
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When asked if the FY2028 target was affected by the current US administration and general macroeconomic sentiment, Ong says the team is “working very hard”. He adds that despite “certain supply chain challenges” the group is seeing a “healthy pipeline” across all segments — oil and gas, offshore wind and new energy retrofits. The group still sees a “strong robust requirement” for the oil sector while underlying demand for offshore wind remains strong as certain European governments’ move towards energy security remains.
“The long-term, structural demand for energy infrastructure remains strong,” he says, citing the need for more energy from a growing population, data centres especially with the adoption of artificial intelligence (AI) and energy security given the geopolitical challenges.
On the group’s order book, Ong says the amount is “comfortable” for the group to execute in the next few years because it will continue to add on. He adds that the order book does not include the group’s repairs and upgrades business.
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When asked about the notice of arbitration from Maersk over a US$475 million ($617.6 million) contract dispute, Ong told media and analysts that the group had “regular project meetings” but refused to add as the situation is “rather sensitive”.
As far as Seatrium is concerned, the group will refute the claims and it will still continue working towards its completion deadline of Jan 30, 2026. “The most important thing is for us to complete the asset so that you know there is a completed asset for the field,” says Ong.
The group will have to assess any impact once the January deadline comes, he adds. The Maersk contract, which is 99% completed, was a pre-merger deal, according to Citi Research analyst, Luis Hilado. This means that the contract will see a down payment of 20% and the remaining 80% will be paid upon delivery. It is also a low gross margin contract compared to the double-digit margins seen post merger, says the analyst.
In the call, Ong said the 80% will be financed by the yard and that this is the last of the legacy projects with such terms.
Shares may remain range-bound, says Citi’s Hilado
Citi’s Hilado has maintained his “buy” call and target price of $2.65 as Seatrium’s 9MFY2025 order cadence remained “healthy”. However, he notes that the group’s order book remains “sparse” with just one new order secured in the 3QFY2025.
“Management indicated that a number of projects in the $30 billion opportunities ($19 billion in oil and gas; $11 billion in offshore wind) are coming closer to final investment decision (FID) but timing is always a client decision and not directly Seatrium’s,” he writes.
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“Meanwhile the end game for the Maersk termination/arbitration case remains fluid and hence no guidance on whether provisions etc would need to be made could be provided,” he adds.
He also notes that the group’s plan to sell two yards, including its US AmFELS yard, will eventually generate $30 million in annual savings.
With this, the analyst believes Seatrium’s share price is likely to remain range-bound in the short-term until there is more clarity on the Maersk situation and, or when order wins happen.
His “buy” call is premised on an order win recovery in FY2026 and FY2027 and for any margin upside realisation to be more material with legacy contracts no longer dragging on the group’s bottomline.
Shares in Seatrium closed 2 cents higher or 0.93% up at $2.18 on Nov 13.
