Seatrium (SGX: S51) shares are back down 2% today. S51 shares are now just about back to where they were before the Shell deal was announced. Which gives us a useful indication of the trading range really. Sure, so some interesting news comes along, there’s a blip. But it is a blip, not a sustained change in price level. The difficulty, we think, is the industry that Seatrium’s in. Yes, offshore services, ship building, what with the wind revolution it’s obviously a growth area. Yet every country seems insistent on subsidising its own shipyards - therefore there’s little to no profit in the game.
We’ve talked before of Seatrium: “Seatrium (SGX: S51) is the former Sembcorp Marine. No, the name change was not all about that Brazilian corruption inquiry - that's all dealt with anyway. Rather, there was a merger of interests and a name change seemed like a sensible thing to do at the time. “ Singapore, 3 April 2023 – Sembcorp Marine Ltd (the “Company” or “Sembcorp Marine” and, together with its subsidiaries, the “Group”), is proposing to change its name from “Sembcorp Marine Ltd” to “Seatrium Limited” following completion of the combination of the businesses of the Company and Keppel Offshore & Marine Ltd on 28 February 2023, and will adopt a new branding for the enlarged entity.”” There was indeed that shock over Brazilian corruption but that was all historic and also not hugely a surprise about Brazil at that time. Then that merger.
But the Seatrium business is still in those marine services. Which is a difficult business at present. There was also a much more recent and vastly smaller Seatrium bribery problem.
Seatrium share price from Google Finance
The recent blip upwards seems to be about the Shell deal: “Singapore offshore, marine and energy contractor Seatrium has secured a letter of intent for the floating production unit destined for UK supermajor Shell’s ultra-deepwater Sparta field development in the US Gulf of Mexico.” OK, that’s great. But as we can see the excitement of such contract wins - until we know the full size perhaps - does tend to be transient.
We tend to think that Seatrium will need something better than simple business announcements to shock the share price out of its current trading range.