Hot stock: Seatrium falls as much as 11.2% amid heavy trading

SHARES of mainboard-listed Seatrium lost as much as 11.2 per cent on Monday (Mar 18), extending two days of losses.

The counter reached a low of S$0.079 at 3.57 pm, down S$0.01 from Friday’s closing price. The last time the counter closed near this level was in November 2021.

By 4.20 pm, Seatrium’s shares were down 10.1 per cent or S$0.009 to S$0.08. They were the top most traded by volume on the Singapore bourse at the time, with 1.7 billion shares changing hands.

DBS Group Research on Monday cut its FY2024-25 profit forecasts for Seatrium by 13 to 16 per cent, after factoring in updates from the offshore and marine group’s Investor Day presentation on Friday.

Seatrium’s management guided for a revenue target of S$10 billion to S$12 billion by 2028, implying a five-year compound annual growth rate of between 7 and 10 per cent.

Profitability targets, however, seem less inspiring, DBS said in a research note.

The group is aiming for at least S$1 billion in earnings before interest, taxes, depreciation, and amortisation and at least an 8 per cent return on equity by 2028. DBS expects this to be achieved earlier in the next two to three years.

It has reiterated “buy” on Seatrium and a target price of S$0.15, which implies a potential upside of 87.5 per cent from the counter’s 4.20 pm trading price.

OCBC Investment Research, meanwhile, has a “buy” rating and fair value estimate of S$0.16 on Seatrium, implying a potential upside of 100 per cent.

It noted in a separate research note that Seatrium had kitchen-sinked S$2 billion in FY2023 largely from non-cash write-downs related to yard and yard assets. The group also said it reached a resolution with the Brazilian authorities on Operation Car Wash.

“With the overhang on the stock largely removed and a clearer sense of the new management’s strategic direction, we believe that Seatrium is well positioned for a turnaround, though key risks would be management’s ability to execute as well as lower-than-expected order book wins,” OCBC noted.