DBS update note

< Results Analysis> 1Q26 business update

• Orderbook moderated to SGD15.5bn (from SGD17.8bn a quarter ago), implying revenue of c.SGD2.8bn for 1Q26, in line 
• Margin recovery remains on track, supported by better project mix, lower overheads and disciplined contract selection successfully delivered two remaining onerous contracts
• Energy security and transition themes continue supporting > SGD28bn pipeline opportunities across offshore O& G, wind and conversions
• Reiterate BUY and TP SGD3

1Q26 revenue seems in line.  In its 1Q26 business update, Seatrium reported that net orderbook moderated to SGD15.5bn (vs SGD17.8bn a quarter ago) across 24 projects, providing revenue visibility through 2033. We estimate that this implies revenue of c.SGD2.8bn in 1Q26 (higher y/y). It is worth noting that the deliveries of the two remaining legacy onerous contracts - Frederick Paup TSHD and Maersk Viridis WTIV - eliminate risks of further provisions for these projects forward. Other ongoing FPSO, FPU, HVDC and offshore wind projects progressed largely on schedule. Management highlighted improving gross margins driven by a better project mix, lower overheads and stricter contract selectivity, with increasing preference for Series Build projects featuring progressive milestone payments and stronger project governance.

Contract flows remain the key catalyst.  Contract flow has been relatively slow, in the absence of major sizeable projects, in 5M26. The group has only secured some repair/upgrade jobs, including its eighth FSRU conversion project from Karpowership, reinforcing its strengthening position in LNG and gas infrastructure conversion solutions. Though order outlook remains constructive, underpinned by a sizeable > SGD28bn identified pipeline over the next 24 months spanning offshore O& G, offshore wind and conversion projects. Management continues to see rising energy security concerns and elevated oil prices as supportive for offshore infrastructure investments, although customer capex deployment remains disciplined and progressive. Importantly, the completion of announced non-core asset divestments is expected to unlock > SGD50mn annualised operational cost savings and > SGD330mn cash proceeds, supporting further balance sheet strengthening and margin expansion. Together with its diversified exposure across traditional and transition energy, Seatrium appears increasingly well-positioned to benefit from the emerging global offshore reinvestment cycle.