Seatrium's orderbook soars to above S$20 billion

🕵️‍♂️ What happened?

• Seatrium (formerly Sembcorp Marine) announced that its net orderbook has grown to above S$20 billion. 
• This is higher than Sembcorp Marine and Keppel Offshore and Marine's combined orderbook of S$17.8 billion in December 2022.

🔧 What are the drivers of Seatrium's share price?

• Seatrium has seen strong order momentum year-to-date. In May 2023, the company was awarded a contract worth more than S$500 million for two offshore wind farm substations. This follows a contract worth 6 billion euro won by a Seatrium consortium to supply high voltage direct current electrical transmission systems for three mega offshore wind farm projects. 
• The contracts demonstrate the company’s transition towards green energy, with renewables and green solutions now comprising 39% of the company’s order book. 
• Seatrium has a healthy balance sheet following the completion of its merger with Keppel Offshore and Marine. The company has a net debt/equity ratio of 0.18x as of March 2023, a decline from 0.26x in December 2022. 

🧐 What to look out ahead for Seatrium?

• Seatrium is undergoing a strategic business review which is expected to be completed before the end of 2023. The review could unlock synergies and build a roadmap for sustainable growth. 
• Seatrium is the largest stock on the reserve list of the benchmark Straits Times Index (STI) currently, and could be included into the index in future reviews.

🧮 What's the valuation of Seatrium?

• Seatrium is currently trading close to 1x P/B despite the strong order momentum. 
• The consensus target price for Seatrium is $0.156. This is 23% above Seatrium's share price of S$0.127 as of 19 May 2023.

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