Can Seatrium build on its robust H1 earnings? UOBKH and DBS analysts have divided views
UOBKH downgraded Seatrium to “hold” from “buy” and lowered its target price to S$2.30
[SINGAPORE] Seatrium reported a strong turnaround for its first half ended June 30, 2026, on the back of higher-margin projects, productivity improvements that lowered costs, and asset divestment gains. But analysts are divided on whether the group can sustain the sterling performance in the absence of major near-term contract wins.
For H1 2026, Seatrium’s net profit jumped 158 per cent year-on-year to S$372 million, boosted by a S$172 million gain from the sale of non-core assets. Stripping out one-offs, core net profit rose 54 per cent year on year to S$212 million.
Despite the operational beat, UOB Kay Hian (UOBKH) downgraded Seatrium to “hold” from “buy” and lowered its target price from S$3.15 to S$2.30 in a note on Monday (Aug 3). The counter closed at S$2.21 on Tuesday.
Analyst Roy Chen said a quieter H1 on the order front shrank the group’s net order book to S$13.3 billion, down from S$17.8 billion six months prior.
“The pace of order wins in H2 2026 is more important than just good earnings, as the current S$13.3 billion net orderbook does not provide good revenue visibility beyond one year,” Chen noted.
He added that Seatrium “urgently needs some sizeable order wins in the next six months to sustain investor confidence,” pointing to Petrobras’ P-88 Floating Production, Storage, and Offloading (FPSO) tender as a crucial near-term catalyst.
“Despite the H1 2026 results beat and the likely even stronger H2 2026 core earnings, we downgrade Seatrium to hold in a cautious move, due to poor revenue visibility beyond 2026,” he said.
DBS Bank Research, on the other hand, maintained its “buy” call with a target price of S$3.
While it acknowledged that “the next key catalyst to re-rate the stock hinges on contract win momentum”, it also notes that the order pipeline has grown to over S$32 billion as at end-June, from S$28 billion in May 2026.
“Besides the highly anticipated Petrobras’s FPSOs (around S$4 billion each) likely towards year end and Tennet’s HVDC converter station (around S$2 billion each), Seatrium is also seeing higher enquiries for gas related projects (FLNG etc) and production related platforms in Africa /Middle East regions,” DBS analyst Pei Hwa Ho said.
CGS International also reaffirmed its “add” rating with a S$2.52 target price.
Analysts Meghana Kande and Lim Siew Khee expect order wins to nearer the end of H2 2026, citing strong demand for gas-related conversions and newbuilds.
“Sizeable order contracts of at least S$1 billion are a key re-rating catalyst for Seatrium, along with stronger-than-expected gross profit margin expansion. We maintain our “add” call on Seatrium to benefit from buoyant offshore activity globally,” CGSI analysts said.
Morningstar raised its fair value estimate by 4 per cent to S$2.90, maintaining that Seatrium shares remain undervalued, viewing its S$4.4 billion to S$8.5 billion annual order win trajectory through 2030 as fully achievable given tailwinds from energy security and the green transition.
“We see visible near-term opportunities in floating production storage and offloading, where Seatrium’s record and three yards in Brazil position it well to meet local content requirements,” analyst Chokwai Lee said.
UOBKH said an orderbook restored to at least S$15 to S$18 billion equivalent to 1.5 years of Seatrium’s target annual revenue (S$10 billion to S$12 billion) as well as confidence in Seatrium being able to sustain an order win momentum of at least S$9 billion for an extended period will turn them more bullish.
Signaling internal confidence in its fundamental valuation despite the analyst downgrade and price weakness, Seatrium actively resumed market purchases, executing its latest daily share buy-back on Aug 4.
Morningstar noted that with about S$90 million completed under its initial S$100 million buyback programme, it expects a new programme once the current one is completed.
“Assuming another S$100 million authorisation, it would represent about 1.4 per cent of the current market cap,” Morningstar’s Lee said.
Notwithstanding some analysts’ views, investors may also be taking profit on Wednesday amid overall market weakness. Seatrium stocks had surged 8.9 per cent on Monday following its results on July 31 and were trading at S$2.17 at 11.32 am on Wednesday, S$0.04 or 1.8 per cent lower.
