Fabricating for the future?
Let’s take a look at Seatrium (“the Group”), the Temasek-backed, SGX-listed engineering, procurement and construction (“EPC”) company born out of a restructuring of SG-inc juggernauts (Keppel Offshore & Marine and Sembcorp Marine).
Executive summary
A good company doesn’t always translate into a good stock. Suggest to avoid until it drops and stays comfortably at least at low to mid-teens P/E levels before entering, premised on the following:
Pros:
- Strong O&G structures and ship fabrication track record inherited from pre-restructuring businesses.
- Balanced mix of order book between “old” and “new” energy – 66% exposure to conventional hydrocarbon projects and 34% from renewables (as of 30 June 2025).
- Expected to continue to enjoy long-term support from its key shareholder (Temasek), given its expertise in fabrication, which is likely a strategic skill to be nurtured for an island nation like SG.
Cons:
- Replenishment of Seatrium’s order book in the short to medium-long is likely to remain sensitive to oil price. I am currently bearish on the outlook for oil prices.
- Demand for renewables (e.g. wind) may be in for a winter, which will in turn result in lower demand for Seatrium’s renewables-related expertise.
- c.60% of the Group’s revenue is derived from Brazil. Preferably, the Group should seek to increase contribution from other geographies to minimize the risks associated with this overexposure. We can already see this risks manifesting in some challenges with Petrobras.
- Loftier valuations compared to ASEAN (e.g. YZJ Shipbuilding) and EU (e.g. Saipem, Subsea7) EPC/shipbuilding players, so upside may be limited. More attractive when compared to Korean shipbuilders.
Business Overview, Management and Key Shareholders
Business Overview: Created in 2023 via the acquisition of Keppel O&M by Sembcorp Marine, the Group primarily makes money from the design and construction of offshore platforms, rigs, floaters and specialised vessels, as well as vessel repairs, upgrades and conversions.
The Group’s customers are primarily upstream players in the oil and gas and renewable energy (e.g. wind) space. As of 1H2025, 60% of the Group’s total revenue was derived from Brazil (SGD3.2bn of SGD5.4bn). Other key markets include the U.S. and the Netherlands. This inherited exposure to a single emerging market is risky and will likely take a long time to change.
Management: The current CEO, Chris Ong is a veteran, having been in the Group (i.e. Keppel pre-restructuring and Seatrium currently) for almost 3 decades. This is generally a good sign, you can read his profile and form your own judgement.
Key shareholder: Temasek is the Group’s largest single shareholder – I speculate that this is a strategic holding for the fund, given its track record in energy- and marine-related fabrication, which is likely strategic for a country like SG. One can further speculate to say that, it is likely that Temasek will step in should Seatrium encounter going-concern problems – good news for long-term value investors.
Financial highlights
Seatrium’s revenue has been on an uptrend, and expected to grow from SGD7.3bn in 2023 (being the year the merger was completed) to c.SGD10bn in 2025.
PATAMI margins are currently at about 5%, and management had previously target to grow PATAMI margins to up to 10% by 2026, which is commendable in this inflationary environment.
Valuation and Target Price
Seatrium currently trades at a trailing P/E of almost 30x, and forward P/E of closer to 20x (as of early Feb 2026). In contrast, with the exception of the Korean shipbuilders, Seatrium is generally more expensive than its peers e.g. YZJ Shipbuilding at sub-10x forward P/E, Europe-listed oilfield services players (e.g. Technip, Subsea-7) at mid-teens forward P/E.
The Group understandably, does not pay any significant amount of dividends (final FY2024 div: SGD0.015/share). Whether this will increase meaningfully in the near future remains unknown.
Conclusion
Fundamentally, the Company’s turnaround is well underway, supported by its good track record and execution capabilities. However, the Company current trading levels can be considered expensive, when viewed in the context of the macro backdrop (“drill baby drill”, Middle East geopolitics being less of a swing factor in oil price, slowing demand for hydrocarbons, and a speed bump in the renewables drive).
Given the lack of dividends, its important to acquire shares in Seatrium at a cheaper price, to maximise value for above average returns. For better margin of safety, the stock will be revisited when P/E ratio are low-to-mid teens.
What did I do?
Purchased Seatrium at c.SGD2.40, averaged down to SGD2.11 in April 2025 in the midst of “Liberation Day”, trade war-induced market volatility. Exited in early Oct 2025 when the stock recovered to SGD2.40-levels for a small profit.
Update history
Created: 12 Oct 2025
Published: 12 February 2026
Disclaimer
This post is not investment advice. The information in this post may not be accurate. If you are in doubt, please seek professional advice. Please do your own research before making any investment decision. C&C1978 is not responsible for any losses that you may suffer from taking a long or short position on any investable assets mentioned in this post. For the full disclaimer, please refer to the Disclaimer page of this Website.
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