From the perspective of Ho Pei Hwa of DBS Group Research, who has raised her target price slightly from $2.96 to $3, Seatrium’s FY2025 numbers would “materially boost confidence” that it is on a recovery path while CGSI’s Lim and Kande note that with Seatrium’s 2HFY2025 results were 24% above their expectations, they are reiterating their belief that Seatrium’s turnaround is on track.
The CGSI analysts also appreciate Seatrium’s efforts to keep its costs down, noting that general and administrative expenses dipped to 3% of revenue, instead of 3.6% as expected. In addition, financing costs fell 7% h-o-h. Similarly, UOBKH’s Adrian Loh has flagged cost control as a “clearly a highlight” with FY2025 general and administrative expenses declining to 3% of revenue from 3.5% in FY2024.
In FY2024, Seatrium quantified the merger benefits and cost savings at $300 million and procurement savings at $200 million. At the results briefing attended by The Edge Singapore, CFO Stephen Lu says that Seatrium has exceeded the targets and that “the proof is in the numbers”.
Besides lower general and administrative expenses, Lu points out that gross margin reversed from –2.9% in FY2023 to 7.4% in FY2025, while the cost of debt decreased from 5.7% to 3.4%. “As we continue to streamline operations and tighten overheads, we see accelerated pathways for further expansion through our ongoing divestments of non‑core assets,” he says.
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In addition to cost savings, analysts are pleased to hear Seatrium’s plan to further optimise costs and divest non-core assets. Citi’s Luis Hilado notes that Seatrium’s higher margins in upcoming years will be supported by $50 million in overhead cost savings in FY2026.
Similar to Hilado, Ada Lim from OCBC also highlights that with Seatrium’s target to divest another $200 million in assets, another $50 million in cost savings can be expected by 2028, bringing cumulative annualised total cost savings to $100 million.
Furthermore, Seatrium’s divestments, amounting to $330 million so far, have resulted in the company booking gains of $70 million in FY2025 with another $160 million expected to be recognised in FY2026.
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As at Dec 31, 2025, Seatrium’s net order book stood at $17.8 billion, comprising 24 projects and providing revenue visibility through to 2033. The company is pursuing a $32 billion pipeline of opportunities.
Seatrium also points out that non-FPSO (floating production, storage and offloading) legacy projects now constitute just slightly over 1% of the net order book. As these legacy contracts are delivered, the CGSI analysts are more confident that Seatrium can eke out better gross margins, with potentially lower provisions for onerous contracts. Without the provisions for onerous contracts in FY2025, Seatrium’s gross margin could have been around 9% instead of 7.4%, according to the CGSI analysts.
On a consensus basis, analysts believe orderbook wins are another key to Seatrium’s prospects. Morningstar’s Lee Chok Wai expects order wins for FY2026 and FY2027 to increase, respectively, to $4.4 billion and $6.5 billion, while Citi’s Hilado projects $5.3 billion and $8 billion in contract wins for FY2026 and FY2027, respectively. CGSI eyes order-win targets of $6 billion and $10 billion for FY2026 and FY2027, and believes that Seatrium has a good chance of clinching contracts from Petrobras’ SEAP 1 and SEAP 2 FPSOs, as well as from TenneT offshore wind farm projects.
However, Lee of Morningstar is of the view that the orders won thus far have been a bit “soft”, even though he notes that Seatrium has revised its pipeline of opportunities from $30 billion to $32 billion. “We think the market remains conservative on future order wins, and any pickup in deal momentum should drive share price performance,” says Lee, who has given a four out of five-star rating, but with a lower target price of $2.80 from $2.92.
Macquarie’s Foo Zhiwei is seemingly most pessimistic, citing concerns over the repair and upgrades segment, where revenue has declined for the third consecutive year, with a most recent drop of more than a fifth to $840 million. Along with a downgrade from “buy” to “neutral”, Foo has cut his target price from $2.80 to $2.14.
