Maybank initiates &lsquo buy&rsquo call for Seatrium

Maybank initiates " buy" for Seatrium at target price at $3.10

 

As the Middle East conflict drags on, affecting the global supply of oil and gas, reports have emerged of nations implementing measures to curb energy use including work-from-home mandates and curtailing aviation activities. Facing fuel shortages, countries are increasingly focusing on securing reliable supplies for their energy needs.

In times of crisis, there is also opportunity. In this vein of thought, Maybank has initiated coverage of global offshore and marine player Seatrium with a &ldquo buy&rdquo rating at target price of $3.10, a 38% premium on the counter&rsquo s Mar 26 closing price of $2.29.

In his Mar 27 initiation report, Maybank analyst Hussaini Saifee expects structural demand tailwinds and strengthening margins to support Seatrium&rsquo s earnings per share to grow by a 27% compound annual growth rate from FY2025 to FY2028.

t the heart of his investment thesis is the sustained geopolitical tensions and conflict which reinforces energy security and supply diversification via new fossil fuel sources and renewable energy.

Observing that with breakeven prices of US$37 to US$43 ($47 to $55) per barrel, offshore is one of the lowest-cost sources of new oil supply. As such, he expects this to drive demand for the production of newbuild floating, production, storage and offloading (FPSO) vessels and cites industry estimates of 40 to 50 FPSOs pipeline up to 2030.

For offshore wind in which Seatrium has won a  contract  for recently, Hussaini believes the sector will grow at a CAGR of around 15% up to 2035.