Note - 

EUR6b with Currency Convertor show S$8.76 b. 

Hope that the above is in order. DYODD.

Happy Day

 

Note - 

EUR6b with Currency Convertor show S$8.76 b. 

Hope that the above is in order. DYODD.

Happy Day

 

sginvestors.io/analysts/research/2024/05/seatrium-uob-kay-hian-research-2024-05-29

 

TOP 10 SEARCH

 

Seatrium - UOB Kay Hian 2024-05-29: Wind In Its Sails

 

Seatrium- Wind In Its Sails

 

Seatrium provided a 1Q24 business update that was qualitative in nature and continues to strongly underline its exposure to large-scale offshore projects globally. These include both production of oil & gas as well as offshore wind power.

 

In addition, Seatrium' s repairs & upgrades segment continues to do well, notably signing a number of long-term favoured-customer contracts with blue-chip clients.

 

Wind In Its Sails.

 

Seatrium (SGX:5E2) provided a business update that did not disclose any revenue or profit figures however, the highlight was clearly around the two Floating Production Storage and Offloanding (FPSO) vessel construction contracts that Seatrium won from Petrobras worth S$11b. Year-to-date Seatrium has won S$11.4b worth of projects.

 

The other highlight from its business update relates to Seatrium looking to bid for Petrobras' next seven FPSO projects.

 

Larger-Than-Expected Contract Value From Petrobras.

 

The recently-won P-84 and P-85 FPSO projects were larger in value than market expectations of S$8b-9b. However, Seatrium commented that margins remain the same, which we estimate to be in the 8-11% range. These are Petrobras' new generation of FPSO platforms with higher specifications to ensure better fuel economy, and also include a number of " greener" technologies such as non-flaring and decarbonisation solutions.

 

Large Wind Orders Still In Play.

 

The contract allocation for TenneT' s third 2GW High Voltage Direct Current (HVDC) project is expected to close soon and Seatrium does not expect any delays.

 

Note that while the US has seen some order cancellations (particularly on the US East Coast), the same cannot be said of the EU which has continued to expand its offshore wind capacity. Recall that TenneT' s second HVDC was worth EUR6b.

 

Repairs & Upgrades Segment Should Continue To Provide Long-Term Sustainable Revenues.

 

Over the course of the past 6-12 months, Seatrium has signed a number of long-term favoured-customer contracts with blue-chip clients, thus ensuring that its repairs & upgrades segment continues to provide a strong base load of revenues over the next 12 months and beyond.

 

Year-to-date, Seatrium has secured S$350m of contracts in this segment.

 

Outlook Remains Bullish In Our View.

 

Seatrium' s management notably commented that it has seen an uptick in the numbers of jobs for drilling rigs as well as for its repairs & upgrades segment.

 

While the industry has not seen any orders for new drilling rigs, the higher day rates and utilisation rates across all assets in the industry should lead to new orders in 2025 or 2026, in our view. We note that higher spec jack-ups, despite uncertainty created by Saudi Aramco' s contract cancellations in the Middle East, have exceeded US$200,000 per day in a number of recent contracts.

 

Apart from drilling assets, production assets still remain in demand due to the stable and relatively high oil prices, with management singling out the Gulf of Mexico as having opportunities.

 

Balance Sheet - Incrementally Better.

 

In 1Q24, Seatrium secured a S$400m committed Green Revolving Loan Facility to support its business growth in the offshore renewables space, adding to more than S$2b in sustainability-inked loans and green financing from last year.

 

During 1024, Seatrium completed the early redemption of its high-interest S$500m floating rate bonds due in 2026.

 

Maintain BUY Rating On Seatrium

 

We maintain our BUY rating on Seatrium with a P/B-based Seatrium target price of S$3.23 which has been adjusted for its 20-for-1 share consolidation.

 

Our target P/B multiple of 1.5x is 2 standard deviation above Seatrium' s 5-year average of 1.1x and is pegged to its 2025 book value of S$2.04.

 

Given the company' s exposure to the offshore marine upcycle, we strongly believe that Seatrium is inexpensive, trading at -1 standard deviation below its mean.

 

Maintain Sector View At OVERWEIGHT.

 

We continue to like Seatrium as we believe that the company will benefit from stronger offshore marine dynamics as well as demand for offshore vessels and structures related to the renewables industry.

 

In addition, the normalisation of economic activity should result in a greater volume of shipping activities, thus positively impacting its repairs/upgrades segment.

 

While 40% of Seatrium' s current orderbook is in the renewable energy space (with the remainder related to oil & gas projects), its addressable market is arguably much larger when taking into account carbon capture usage and storage, floating LNG, and ammonia storage and transport which feeds into the hydrogen energy chain.

 

Catalyst:

 

New orders for rigs (especially for the Brazilian FPSOs which are likely to be due in the next few months).

 

Offshore renewable installations or fabrication works.

 

Repairs and upgrade works for cruise ships and other commercial vessels.

 

Above is the excerpt from report by UOB Kay Hian Research.

sginvestors.io/analysts/research/2024/05/seatrium-uob-kay-hian-research-2024-05-29

 

TOP 10 SEARCH

 

Seatrium - UOB Kay Hian 2024-05-29: Wind In Its Sails

 

Seatrium- Wind In Its Sails

 

Seatrium provided a 1Q24 business update that was qualitative in nature and continues to strongly underline its exposure to large-scale offshore projects globally. These include both production of oil & gas as well as offshore wind power.

 

In addition, Seatrium' s repairs & upgrades segment continues to do well, notably signing a number of long-term favoured-customer contracts with blue-chip clients.

 

Wind In Its Sails.

 

Seatrium (SGX:5E2) provided a business update that did not disclose any revenue or profit figures however, the highlight was clearly around the two Floating Production Storage and Offloanding (FPSO) vessel construction contracts that Seatrium won from Petrobras worth S$11b. Year-to-date Seatrium has won S$11.4b worth of projects.

 

The other highlight from its business update relates to Seatrium looking to bid for Petrobras' next seven FPSO projects.

 

Larger-Than-Expected Contract Value From Petrobras.

 

The recently-won P-84 and P-85 FPSO projects were larger in value than market expectations of S$8b-9b. However, Seatrium commented that margins remain the same, which we estimate to be in the 8-11% range. These are Petrobras' new generation of FPSO platforms with higher specifications to ensure better fuel economy, and also include a number of " greener" technologies such as non-flaring and decarbonisation solutions.

 

Large Wind Orders Still In Play.

 

The contract allocation for TenneT' s third 2GW High Voltage Direct Current (HVDC) project is expected to close soon and Seatrium does not expect any delays.

 

Note that while the US has seen some order cancellations (particularly on the US East Coast), the same cannot be said of the EU which has continued to expand its offshore wind capacity. Recall that TenneT' s second HVDC was worth EUR6b.

 

Repairs & Upgrades Segment Should Continue To Provide Long-Term Sustainable Revenues.

 

Over the course of the past 6-12 months, Seatrium has signed a number of long-term favoured-customer contracts with blue-chip clients, thus ensuring that its repairs & upgrades segment continues to provide a strong base load of revenues over the next 12 months and beyond.

 

Year-to-date, Seatrium has secured S$350m of contracts in this segment.

 

Outlook Remains Bullish In Our View.

 

Seatrium' s management notably commented that it has seen an uptick in the numbers of jobs for drilling rigs as well as for its repairs & upgrades segment.

 

While the industry has not seen any orders for new drilling rigs, the higher day rates and utilisation rates across all assets in the industry should lead to new orders in 2025 or 2026, in our view. We note that higher spec jack-ups, despite uncertainty created by Saudi Aramco' s contract cancellations in the Middle East, have exceeded US$200,000 per day in a number of recent contracts.

 

Apart from drilling assets, production assets still remain in demand due to the stable and relatively high oil prices, with management singling out the Gulf of Mexico as having opportunities.

 

Balance Sheet - Incrementally Better.

 

In 1Q24, Seatrium secured a S$400m committed Green Revolving Loan Facility to support its business growth in the offshore renewables space, adding to more than S$2b in sustainability-inked loans and green financing from last year.

 

During 1024, Seatrium completed the early redemption of its high-interest S$500m floating rate bonds due in 2026.

 

Maintain BUY Rating On Seatrium

 

We maintain our BUY rating on Seatrium with a P/B-based Seatrium target price of S$3.23 which has been adjusted for its 20-for-1 share consolidation.

 

Our target P/B multiple of 1.5x is 2 standard deviation above Seatrium' s 5-year average of 1.1x and is pegged to its 2025 book value of S$2.04.

 

Given the company' s exposure to the offshore marine upcycle, we strongly believe that Seatrium is inexpensive, trading at -1 standard deviation below its mean.

 

Maintain Sector View At OVERWEIGHT.

 

We continue to like Seatrium as we believe that the company will benefit from stronger offshore marine dynamics as well as demand for offshore vessels and structures related to the renewables industry.

 

In addition, the normalisation of economic activity should result in a greater volume of shipping activities, thus positively impacting its repairs/upgrades segment.

 

While 40% of Seatrium' s current orderbook is in the renewable energy space (with the remainder related to oil & gas projects), its addressable market is arguably much larger when taking into account carbon capture usage and storage, floating LNG, and ammonia storage and transport which feeds into the hydrogen energy chain.

 

Catalyst:

 

New orders for rigs (especially for the Brazilian FPSOs which are likely to be due in the next few months).

 

Offshore renewable installations or fabrication works.

 

Repairs and upgrade works for cruise ships and other commercial vessels.

 

Above is the excerpt from report by UOB Kay Hian Research.