Seatrium Limited Unsponsored ADR

First-half 2026 revenue grew 4.6% to $5.6 billion, or 5% in the CEO’s remarks. Gross margin expanded to 8.6% from 7.4% a year earlier, up 120 basis points. Net profit rose 158% to $373 million; excluding divestment gains, NPAT increased 54% to $212 million. EBITDA excluding divestments rose 20% to $479 million. OCF excluding a one-time legacy payment was $114 million; including the $73 million car wash settlement, reported OCF was $41 million. Free cash flow was $237 million excluding that settlement, and the company cited $167 million of cash unlocked from asset divestments. Liquidity stood at $3.4 billion in cash and undrawn committed facilities, net leverage improved to 0.5x, and net gearing was 0.1x. For capital management, Seatrium launched a $3 billion multicurrency debt issuance program and sold a senior unsecured note due 2031 for $400 million at 2.95%. Management said the net order book is $13.3 billion/$13 billion with 24 project deliveries through 2033, and new order wins to date are just over $100 million. For full-year/near-term guidance, management said H2 2026 should see stronger Repairs & Upgrades volumes, full annualized savings from divestments from May 2026, P-80 and P-82 sailaways in H2 2026, and a stronger full-year 2026 performance if current margin drivers and divestment gains continue.

Chris Ong framed the first half as a transition from recovery to value creation, emphasizing margin expansion, cost optimization, and a higher-quality order book. He repeatedly stressed that demand is not the issue; rather, project timing and FID timing are the main constraints, with activity strong across FPSO, LNG conversions, offshore wind, and Repairs & Upgrades. His tone was confident and strategic, with a clear message that Seatrium is positioning for FY2028 targets through better execution, series-build exposure, and disciplined pricing to win.

Stephen Liu focused on structural profitability and balance-sheet strength. He said gross margins improved to 8.6%, G&A stayed around 3% of revenue, divestments contributed a pretax gain of $172 million, and the divestment program should deliver a $50 million run rate, with only about $10 million recognized in H1 and the balance expected in H2. He also highlighted positive cash generation, including $114 million OCF excluding the $73 million car wash settlement, $52 million of CapEx, $237 million of free cash flow excluding that settlement, and a strong liquidity position of $3.4 billion. On capital allocation, he pointed to the new debt program, the $400 million 2031 note at 2.95%, and the ongoing monetization of non-core assets, including Aquarius Brasil sold above book value for over SGD 80 million.

Analysts pressed management on Petrobras tendering, especially how Seatrium competes under BOT structures versus EPC, and whether direct tendering overlaps with subcontracting. Management said the core value proposition is still the EPC scope, that BOTs are mainly a different commercial structure with similar end exposure, and that pricing to win with trusted partners matters more than a simple win-rate metric. Questions also focused on the $32 billion pipeline, with management saying the increase is mainly driven by LNG-related opportunities, including 6 to 9 FSRU tenders, while offshore wind momentum should return in 2027. On Repairs & Upgrades and ship chartering, management said the Middle East MRO pace is slower but not structurally disrupted, and that after Aquarius Brasil closes there will be no remaining ship chartering business.