Seatrium ends 2.3% higher on S$50 million savings target ahead of full-year earnings

[SINGAPORE] Shares of marine and offshore specialist Seatrium rose on Monday (Feb 23) morning on news of its S$50 million savings target in annualised operational cost.

The counter was up at S$2.25 as at 9.24 am, an increase of 4.2 per cent or S$0.09 from its last closing price of S$2.16 on Friday. Some 9.6 million shares changed hands.

As at 1.23 pm, it eased to S$2.21, still up 2.3 per cent or S$0.05. With close to 17.2 million shares transacted, it was one of the top traded counters on the Singapore Exchange by volume. Shares of Seatrium ended Monday 2.3 per cent or S$0.05 higher at S$2.21.

On Monday, Seatrium announced that it expects to achieve more than S$50 million in annualised operational cost savings by early 2026 through the divestment of non-core assets. The divestments will help optimise its cost structure, enhance asset utilisation and sharpen its competitive edge.

The expected savings follow several transactions involving the divestment of shipyards, tugboats and equipment.

The news comes as Seatrium is due to announce its full-year financial results on Thursday.

Citi Research said that Seatrium’s divestments of non-core assets are “further steps in the right direction to bridge the gap between double digit new project margins versus group earnings before interest, taxes, depreciation, and amortisation margins”, which remain in the high single digits as of H1 2025.

The research house assigned Seatrium a “buy” call and a target price of S$2.60, a premium of S$0.44 or 20.4 per cent above its latest closing price on Friday.

Citi Research analyst Luis Hilado noted that the target price is based on a price-to-book ratio approach, as the research house thinks that FY2023 write-offs have “significantly lessened the risk of goodwill impairments”.

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Seatrium targets over S$50 million in savings through asset divestments

The research house applied a target multiple of 1.2 times on FY2026 estimates, as it expects the market to look into Seatrium’s long-term prospects, with new higher-margin contracts set to raise returns further and push return on equity higher, Hilado said.

“It would be ideal in the upcoming end-FY2025 results briefings that management outline any other divestment targets going forward and their potential overhead savings and margin realisation,” he said.

Notable divestments

The expected S$50 million worth of annualised operational cost savings come alongside recent disposals of the AmFels yard in Texas and the divestment of its unit Guanabara Navegacao, a special purpose vehicle that owns two platform supply vessels – both of which were announced in 2025.

Key divestments in Singapore and Indonesia include the S$22 million sale of its Karimun Yard in Karimun island, Indonesia, in December.

This was executed through Seatrium’s subsidiary Karimun Sembawang Shipyard and followed a binding agreement with Tirta Segar Alami, an entity linked to Indonesian conglomerate Salim Group.

There were also the S$104 million sale of a 17-tugboat fleet to KST Maritime and Maju Maritime, and the S$16.9 million sale of its Can-Do 2 floating dock in January.

In addition, the divestment of its Crescent Yard in Singapore to Mooreast Holdings for a cash consideration of S$12.5 million is slated to be completed by the first quarter of 2026.

In its latest third-quarter business update in November, Seatrium reported a S$16.6 billion net order book as at end-September. This comprised 24 projects with deliveries extending through to 2031, with new orders largely from returning customers.

Then, the group reported it was making “steady progress” towards its 2028 financial targets. This includes its 2028 revenue target of S$10 billion to S$12 billion, amid factors such as its order book, optimisation of operational efficiencies and divestments of non-core assets.