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Offshore Marine – Singapore

Full Steam Ahead If You’re In Singapore
Date: Tuesday, 29 July 2025
Prepared by: UOB Kay Hian Private Limited
OVERWEIGHT (Maintained)

Executive Summary

Global shipping and offshore markets have slowed in 2025 amid geopolitical uncertainty, with newbuild orders down 54% year-on-year and some rig dayrates showing softness. While US energy companies revealed cautious guidance at their 2Q25 earnings announcements, we remain optimistic on STM and MPM while YZJSGD’s recent rally affirms improving sentiment, with valuations remaining attractive.

Sector Picks & Recommendations

Company Ticker Recommendation Current Price (S$) Target Price (S$) Upside (%)
Keppel Ltd KEP SP BUY 8.20 9.25 12.8
Sembcorp Industries SCI SP BUY 7.68 8.00 4.2
Seatrium STM SP BUY 2.42 2.96 22.3
Yangzijiang Shipbuilding YZJSGD SP BUY 2.56 3.29 28.5
Marco Polo Marine MPM SP BUY 0.059 0.066 11.9

Key Market Developments

  • Shifting Sentiments: Global geopolitical tensions and US trade policies have created complex forces on the shipping and offshore marine sector in 2025
  • Moderated Pace: Newbuild contracting down >50% year-on-year as at end-1H25, with slowdown particularly pronounced in car carrier, LNG carrier, and tanker segments
  • Alternative Fuel Focus: Despite overall slowdown, 55% of orders are for alternative fuel-capable vessels, highlighting the continued push towards greener vessels
  • Mixed Offshore Rig Market: Leading-edge rig dayrates showed stability in 2Q25, but broader market has seen softening for high-specification jack-ups in Southeast Asia

1H25 Earnings Forecast

Expect stronger profitability year-on-year across key holdings:
Company 1H24 Revenue 1H25F Revenue 1H24 Profit 1H25F Profit UOBKH vs Consensus
Keppel (KEP) S$3,224m S$3,488m S$304m S$497m +2.9%
Sembcorp Industries (SCI) S$3,208m S$3,306m S$540m S$578m In-line
Seatrium (STM) S$4,015m S$4,408m S$115m S$145m -23.5%
Yangzijiang (YZJ) RMB13,049m RMB18,520m RMB3,058m RMB3,833m +4.9%

Stock Highlights

  • Seatrium (STM SP): Strong operational momentum with delivery of ExxonMobil’s FPSO and robust execution of S$21.3b orderbook. Recent Floating Storage Regasification Unit win enhances multi-year revenue visibility.
  • Yangzijiang (YZJSGD SP): Stock rallied 26% since May report. Remains inexpensive at 2025F PE of 6.8x and P/B of 1.3x while generating ROE of 25.0%. Earnings visibility extends into 2028.
  • Marco Polo Marine (MPM SP): Vessels exposed to potential upside in charter rates from 4Q25 and beyond.

Risk Factors

  • Delays in project sanctioning due to supply chain issues
  • Lack of financing for fossil fuel-related industries
  • Global recession leading to lower capex
  • Continued negative impact on sector sentiment due to trade and tariff proposals

Analyst:
Adrian Loh
+65 6590 6633
adrianloh@uobkayhian.com
Disclaimer: This report is prepared by UOB Kay Hian Private Limited for information only and is not an offer or solicitation to deal in securities. This report is provided for general circulation and does not have regard to the specific investment objectives, financial situation and particular needs of any recipient. Advice should be sought from a financial adviser regarding the suitability of any investment product, taking into account specific investment objectives, financial situation or particular needs before making a commitment to purchase any investment product. This report is confidential and may not be published, circulated, reproduced or distributed without prior written consent of UOBKH.