Seatrium: Legal Overhang Removed, Order Book Upgraded and Earnings Visibility Improved Support Buy Rating

Analyst Lim Siew Khee of CGS-CIMB reiterated a Buy rating on Seatrium Limited, retaining the price target of S$2.67.

Lim Siew Khee has given his Buy rating due to a combination of factors relating to Seatrium’s improving earnings visibility and balance of risks. The swift resolution of the dispute with Maersk over the WTIV Sturgeon removes a major legal overhang, confirms a firm delivery schedule by February 2026, and secures a clear payment structure with an upfront cash component and a sizable, interest-bearing credit arrangement. This financing structure is expected to generate recurring interest income of roughly S$12m per year in FY26F–27F, adding a stable income stream on top of project-related earnings. The analyst also notes that, as the vessel is nearly fully completed and recognised using percentage-of-completion accounting, the likelihood of large additional provisions appears limited.

Furthermore, recent contract wins with BP and TenneT have lifted Seatrium’s order book and are expected to come with healthier margins than legacy projects, supporting margin recovery and robust earnings growth over FY25F–27F. On valuation, the unchanged target price of S$2.67 is anchored on 1.3x FY26F P/BV, representing a discount to the stock’s historical trading multiple, suggesting further upside if execution and margins continue to improve. Key re-rating drivers identified include faster-than-expected margin expansion and successful monetisation of non-core assets, while the main risks revolve around potential cost overruns and project delays. Overall, the combination of de-risked legal exposure, incremental interest income, improving order mix, and undemanding valuation underpins the positive stance on the stock.

In another report released on December 12, DBS also reiterated a Buy rating on the stock with a S$2.96 price target.