Seatrium eyes more new order wins; net order book stands at S$16.6 billion in Q3
The group says it is making ‘steady progress’ towards achieving its 2028 financial targets
[SINGAPORE] Offshore, marine and energy specialist Seatrium on Thursday (Nov 13) reported that its net order book stood at S$16.6 billion as at end-September, comprising 24 projects with deliveries extending through 2031.
In a business update for the third quarter ended September, Seatrium said new orders were mostly from returning customers, and included the upgrading of floating liquefied natural gas (FLNG) vessel FLNG Hilli Episeyo, as well as a series of repairs and upgrades projects.
The group said it completed two projects during the quarter and remains on track to deliver three more by year-end. Its net order book stood at S$18.6 billion as at end-June.
Seatrium said it is pursuing a “robust pipeline of opportunities” and is making “steady progress” towards achieving its 2028 financial targets.
“Converting (this) pipeline into new order wins remains a strategic focus, with the current healthy net order book offering near-term revenue visibility,” the group said.
Seatrium added that it anticipates sustained demand for oil and gas assets, driven by rising global energy consumption, especially from data centres and artificial intelligence technologies.
Customer sentiment is largely positive even with the challenges in the markets, from tariffs to supply chain challenges. Energy security has become a lot more important amid the geopolitical challenges around the present US administration, said Chris Ong, chief executive officer of Seatrium.
“Right now countries are taking a look at how they can be self-reliant in terms of energy... so we see opportunities in the current environment,” he said.
Seatrium expects growth from both the sustainability and the oil and gas segments of the business. The oil and gas segment is still going strong, said Ong, with about S$19 billion worth of projects that the company is still chasing. On offshore wind, there is still interest from Asia and Europe, despite the US administration’s stance.
The company is making steady progress to meet its 2028 revenue target of between S$10 billion and S$12 billion. Based on factors such as the order book, optimising operational efficiencies and divesting non-core assets, Seatrium can fire on all cylinders to meet its 2028 target.
“Our proven ability in delivering high-quality solutions for complex offshore and marine projects, coupled with synergies harnessed across our global footprint, positions us well as we focus on converting our robust pipeline into order book for future earnings visibility,” said Ong.
Citi analyst Luis Hilado noted that Seatrium’s order book growth “remained sparse” with only one new order secured in the third quarter. He added that although the group’s management indicated that a number of projects are coming closer to the final investment decision, “timing is always a client decision”.
Seatrium in October said that it rejected a notice of termination of a US$475 million contract inked with a Maersk Offshore Wind affiliate in 2022. The contract was for the construction of a wind turbine installation vessel at US offshore wind farm Empire Wind 1.
Hilado pointed out that the endgame for the case, which is heading to arbitration, remains “fluid” and no guidance could be provided about any provisions needed to be made.
“In the meantime, asset portfolio rationalisation efforts to lower overhead costs continue, and the briefing revealed that the planned sale of two yards alone would eventually generate about S$30 million in annual savings,” he said.
As a result, Hilado forecast that Seatrium’s share price is likely to remain “range bound” in the short term until more clarity emerges on the Maersk situation or order wins begin to cascade in.
He maintained a “buy” call on Seatrium with a S$2.65 target price.
Shares of Seatrium closed 0.5 per cent or S$0.01 higher at S$2.16 on Wednesday.
– with additional reporting by Shikhar Gupta
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