STX OSV
Three New Orders  Cut EPS, TP on Low 2012 Wins

STX OSV secured three new orders for offshore subsea construction vessels with 
an estimated value of NOK2.4bn (USD433m). We view the new orders positively as 
the vessels are based on STX OSV’s designs and margins on these orders could 
surprise on the upside. However, we lower FY13-14F EPS by 4.5% and 8.7% 
respectively as 2012  new  order win of NOK9.5bn was lower than our estimate of 
NOK12bn. Consequently, we  lower  our TP from SGD2.05 to SGD1.96. Our TP is 
based on 12x FY13F P/E. We believe minority shareholders should not accept the 
cash General Offer from Fincantieri at SGD1.22/share as we think the offer 
undervalues the stock.

Secured three OSCV orders valued at around NOK2.4bn. STX OSV secured three new 
orders: i) one offshore subsea construction vessel  (OSCV)  (overall length of 121m and 
beam of 23m) for Solstad Offshore for NOK600m (USD108m) to be delivered in 2Q2014. 
The vessel will be based on STX OSV’s OSCV 03 design  ii) one OSCV (overall length of 
143m and beam of 25m) for Farstad Shipping for NOK800m (USD144m) to be delivered in 
1Q2015. The vessel will be of STX OSV’s OSCV 07 design  iii) one OSCV (overall length 
of 161m and beam of 32m)  for DOF Subsea to be delivered in 1Q2015. Value of  this 
contract was not disclosed. The vessel will be based on STX OSV’s OSCV 12 design. We 
estimate the DOF order to be worth NOK1bn (USD180m).

New orders lifted unbilled order book to NOK20.1bn. As of end 3Q12, STX OSV has 
an order book of NOK16.4bn. Since then, the company has secured NOK3.7bn new orders 
for five offshore subsea construction vessels, lifting its unbilled order book to NOK20.1bn.

Earnings: Cut FY13-14 EPS by 4.5-8.7% on lower FY12 order win. We lower FY12 EPS 
by  4.5% and FY14 EPS by 8.7% as  2012 new order win of NOK9.5bn was below our 
estimate of NOK12bn. We also lower FY13 new order win from NOK15bn to NOK12bn.
We are expecting blended EBITDA margin of 12.7% in FY13.

Valuation: We cut our TP from SGD2.05 to SGD1.96 after we revised down our FY13F 
EPS. Our TP is based on 12x FY13F P/E, 25% discount to our target P/E for rig builders,
and implies 58% upside from its last closing price. Key risks to our view are: i) successful 
privatization by Fincantieri  ii) slowdown in new orders  and iii) project execution risk.


Maintain Buy: Target SGD1.96   

OSK-DMG