Seatrium shares surged following its announcement on Saturday that it has won $11 billion in new orders from longtime customer Petrobras.
Seatrium shares reached as high as $1.80, up 16.9% over last Friday's close of $1.54, before easing somewhat to end the day at $1.72, up 11.69%.
As at 9.25 am, the shares were changing hands at $1.68.
The contracts are to build two floating production storage and offloading (FPSO) platforms P84 and P85.
DBS, in its May 27 note, points out that the contract value is over 30% higher than the last P-83 order worth an estimated $4 billion to $4.2 billion, as new features are added.
DBS estimates that with this "massive" order win, Seatrium's order book stands at more than $25 billion, providing a "much-needed" confidence booster for Seatrium whose shares dropped 15% after it was removed from an MSCI index.
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According to DBS, the drop is "unwarranted" given the company's "intact fundamentals".
"We believe these contract win announcements shall mark the bottoming out of the stock and any positive guidance in the upcoming 1QFY20024 business update on May 28 shall lend further support to share price," says DBS.
"We maintain our belief on Seatrium’s turnaround," says DBS, which is keeping its "buy" call and $3 target price, which is based on 1.5x FY2024 book value.
