UOB Kay Hian: Full Steam Ahead If You’re In Singapore
UOB Kay Hian: Full Steam Ahead If You’re In Singapore
29 Jul 2025
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.
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