5E2.SI Stock Today: S$50m Savings, Citi Buy Into Feb 26 Results – February 24
Seatrium asset divestments took centre stage after the group outlined over S$50 million in annualised cost savings by early 2026, supporting margin and ROE goals. As of the latest close, 5E2.SI traded at S$2.21, up 2.31%, with volume well above average. Citi reiterated a Buy and S$2.60 target, citing improving execution and potential uplift from a leaner footprint. With full-year results due on Feb 26, we look at price action, savings impact, valuation, and the key markers that could confirm higher-margin delivery.
Price action and setup into results
Seatrium rose to S$2.21 (+2.31%) on 22.62 million shares, above its 9.68 million average. The stock traded between S$2.19 and S$2.25, near the 52-week high of S$2.50 and above the 50-day (S$2.1404) and 200-day (S$2.1925) averages. Market cap stands at S$7.48 billion. Elevated turnover suggests active positioning ahead of the Feb 26 print, as investors weigh Seatrium asset divestments and earnings visibility.
RSI at 63 suggests firm momentum, while CCI at 227 flags near-term overbought conditions. ADX at 19 points to a modest trend, with ATR of 0.05 indicating contained daily swings. Bollinger upper band sits near S$2.18 and Keltner upper near S$2.23. A hold above S$2.19 keeps the bias constructive, but overbought signals may cap near-term upside into results.
Why the divestments matter
Management targets over S$50 million in annualised savings by early 2026 through Seatrium asset divestments of non-core yards, vessels, and equipment. This plan trims fixed costs, raises asset turns, and supports margin expansion. Shares reacted positively as investors priced in leaner operations and potential EBITDA uplift. Coverage highlighted the savings drive ahead of results source.
Recent Seatrium asset divestments also recycle capital, with disposals reported around S$155.4 million, reinforcing balance sheet flexibility source. Net debt to EBITDA is about 1.92x, interest cover 3.28x, and free cash flow yield 14.3%. These metrics suggest room to fund working capital and projects while pursuing disciplined exits from lower-return assets.
Citi’s Buy case and valuation checks
Citi kept a Buy with a S$2.60 target, pointing to margin and ROE uplift from Seatrium asset divestments and stronger higher-margin execution. Investors will look for proof that backlog mix and delivery discipline close the EBITDA gap to peers. A cleaner asset base may also reduce volatility in project returns, supporting steadier cash conversion through the cycle.
At S$2.21, Seatrium trades around 0.71x sales and 1.15x book, with a PE near 28x and EV/EBITDA about 13x. ROE is 4.1%, leaving upside if margins improve. The dividend yield is roughly 0.68% with a 19% payout ratio. A B+ stock grade suggests quality, though a separate model shows C+ with a Sell tilt, underlining mixed signals.
What to watch on Feb 26
We will watch for a detailed roadmap on Seatrium asset divestments, quantified cost take-out by line item, and disposal proceeds. Key operating markers include gross margin trend, EBITDA margin step-up, order intake, and cash conversion. Guidance on 2026 savings phasing and ROE targets can validate Citi’s thesis and support a re-rate toward the S$2.60 target.
Watch for slippage on disposal timelines, lower-than-expected savings capture, or project cost overruns. Receivables days near 225 signal working capital risk if collection slows. Interest cover at 3.28x warrants focus on finance costs. Any margin softness or limited disclosure on Seatrium asset divestments could pressure the stock post-results.
Final Thoughts
Seatrium enters results with improving sentiment as the company targets over S$50 million in annualised savings by early 2026 through Seatrium asset divestments. Price action is supportive, with shares above key moving averages and active trading into Feb 26. The investment case now hinges on proof: clear disposal progress, tangible cost-out, and a sustained margin step-up that narrows the EBITDA gap. On valuation, modest sales and book multiples offer room for upside if profitability improves, though a near-28x PE and overbought signals argue for patience on entries. Our takeaway: focus on margin trajectory, cash conversion, and the timing and quantum of divestments. Strong delivery could validate Citi’s Buy view and lift confidence in medium-term ROE gains.
FAQs
What are Seatrium’s key catalysts this week?
The full-year results on Feb 26 are the main catalyst. Investors want clarity on Seatrium asset divestments, a timetable for the S$50 million annual savings, and signs of higher-margin execution. Order intake, gross and EBITDA margin trends, and cash conversion will shape sentiment and drive near-term price reaction.
How do the divestments support margins and ROE?
Seatrium asset divestments remove underused yards and equipment, trimming fixed costs and improving asset turns. Lower overheads raise operating leverage, so each revenue dollar can drop more to EBITDA. Over time, that supports a higher ROE, provided project selection and delivery discipline keep cost overruns in check.
Is the stock overbought after the recent rise?
Momentum is firm, but CCI near 227 and RSI around 63 signal overbought risk into results. Price sits above the 50-day and 200-day averages, which is positive. We would watch support near S$2.19, volume trends, and the results-day guidance before chasing strength at current levels.
How attractive is Seatrium’s valuation now?
At S$2.21, Seatrium is about 0.71x sales and 1.15x book, with a PE near 28x and EV/EBITDA around 13x. That leaves upside if margins expand and ROE rises. The dividend yield is modest, so the case depends on execution, savings capture, and steady cash generation.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.