SEATRIUM expects a financial loss for FY2023 that is “significantly higher than the previous year”, based on its profit guidance on Tuesday (Jan 30).

The group noted that it is expected to make a material non-cash write-down related to the “surplus non-core assets and obsolete inventories” for the financial year, which were identified by the management’s strategic review.

“In line with the group’s business transformation, management undertook a strategic review of its business focus, operational footprint, and assets required to support its strategy of building a profitable and resilient business going forward,” said the group, noting that the assets as surplus to its operations would be written down to improve its productivity.

Seatrium noted during its Q3 business update on Nov 8, 2023, that a net loss for the full year is expected, despite improving operational and financial performances.

The group added on Tuesday that it is in the process of finalising the unaudited financials to be released on Feb 26, and advised shareholders and investors to deal with its shares with caution.

DBS Group Research noted that since the write-down is non-cash, Seatrium’s cash flow should remain intact, in addition to a healthy level of gearing. “We believe the conclusion of this would remove the overhang of kitchen-sinking, paving way for steadier recovery ahead.”

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The research house added that Seatrium’s potential contract wins from Petrobras could also be a near term catalyst. Given its recent price weakness due to negative news flow on offshore wind, a lack of contract wins and concerns over its full-year financials, further weakening of its price post the profit guidance leads to a buying opportunity, said DBS. It keeps a “buy” call with a S$0.18 target price.

As at 3.18 pm on Tuesday, Shares of Seatrium : S51 0% were trading down 3.7 per cent, or S$0.004, to S$0.104.