Analyst Lim Siew Khee from CGS-CIMB reiterated a Buy rating on Seatrium Limited and keeping the price target at S$2.80.
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Lim Siew Khee has given his Buy rating due to a combination of factors that highlight Seatrium Limited’s strategic moves and financial outlook. The company’s decision to divest its AmFELS yard in Texas is seen positively, as it addresses ongoing challenges such as labor shortages and rising costs, and is expected to result in a gain of S$26 million. This divestment is anticipated to reduce operational expenses by S$20 million annually starting in FY26, which is a significant cost-saving measure.
Additionally, the completion of legacy projects, such as the wind turbine installation vessel Charybdis, is expected to lower the provisions for onerous contracts in the second half of 2025. These developments, along with Seatrium’s focus on tight cost controls and potential for significant order wins, support the expectation of a core profit turnaround. Despite a conservative reduction in the FY25 order win target, the company’s efforts to improve execution and margins underpin the Buy rating, with a target price of S$2.80 based on historical trading averages.
In another report released on September 22, J.P. Morgan also initiated coverage with a Buy rating on the stock with a S$3.05 price target.