In a report released on February 22, Lim Siew Khee from CGS-CIMB reiterated a Buy rating on Seatrium Limited (SMBMF – Research Report), with a price target of S$2.80.
Lim Siew Khee has given his Buy rating due to a combination of factors that highlight Seatrium Limited’s improving financial health and strategic positioning. The company’s efforts in cost optimization and refinancing have led to a reduction in financing costs and an improvement in underlying profitability, with a notable underlying profit of S$85 million in the second half of 2024. Additionally, Seatrium’s substantial order book of S$23.2 billion and significant order wins of S$15.2 billion indicate strong future revenue potential.
Another reason for the Buy rating is the anticipated improvement in gross margins. Despite a lower-than-expected gross margin of 2.7% in the second half of 2024, the forecast for fiscal year 2025 suggests a recovery to around 8%, assuming successful project deliveries. The company’s strategic efforts to clean up its books and optimize operating expenses have also been commendable, contributing to a more robust financial position. These factors, combined with the potential for margin expansion and resolution of ongoing investigations, support the positive outlook for Seatrium Limited’s stock.
In another report released yesterday, DBS also reiterated a Buy rating on the stock with a S$3.00 price target.