Kim Eng on 2 Apr 2013
A steal at current price. We initiate coverage on STX OSV (VARD) with a Buy and TP of SGD1.66, pegged to 9x PER on average FY13-15F earnings. As a quality Norwegian shipyard with a niche in high specification offshore support vessels (OSV), VARD deserves to trade at a premium to Asian OSV yards. The conclusion of its sale to Fincantieri Group removes the overhang on share price, while recovering OSV orders will support an earnings turnaround. With a potential capital upside of 35% and FY13F dividend yield of 4.9% (which can rise to 7.3% in FY15F), the stock is a steal.
Depressed by Fincantieri offer. Share price has been de-rated and suppressed due to the lowball offer (SGD1.22/sh) by Fincantieri for STX Group’s 50.75% stake. We suspect that the latter was forced to dispose VARD at such depressed valuations (7.2x FY12 PER/2.0x FY12 P/B) due to financial distress. With the sale concluded, the overhang on share price has been removed and VARD should re-rate positively to at least peer valuation levels.
Setting the stage for outperformance. VARD has been conservative in its order win guidance. We believe that the weakened ordering activity from 2H12 is short-term in nature and foresee a pickup towards 2H13. Offshore activities remain fundamentally strong and the need for a more sophisticated and modern OSV fleet is ever increasing as offshore operations grow more complex. In our opinion, the cautious guidance sets the stage for positive surprises when ordering activities pick up faster and stronger than expected.
Market underestimates strength of recovery. Order win momentum is the key leading indicator to watch. Near-term earnings growth profile masks the real strength and timing of a turnaround given the lagged effect between order win and revenue recognition. We forecast NOK9.7b/12.8b/13.5b in new order wins for FY13F/14F/15F. We expect an 11% dip in FY13F EPS but a 30%/12% surge in FY14F/15F earnings, which puts our earnings forecasts above consensus for FY14F/15F but lower for FY13F. We believe the market has been overly cautious and underestimated the potential strength of a recovery.
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STXOSV
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KepoChicken
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10-Apr-2013 20:47
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Funny.... now still got ppl talk abt STXOSV.. I thought history long long time ago |
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student
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10-Apr-2013 20:40
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Lol... that is true... That is why they have already exited long ago.
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CapitalVia
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10-Apr-2013 20:33
Yells: "FREE Trading Tips : t.co/6rspdLFgjT" |
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its better to buy it..this time seems good | ||||
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guoyanyunyan
Elite |
10-Apr-2013 20:28
Yells: "uncertainty always exist" |
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...that's the meaning of juicy peak.... 了 解 ....
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guoyanyunyan
Elite |
10-Apr-2013 20:25
Yells: "uncertainty always exist" |
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...Institutional fund managers should not be frustrated so easily... ...why 跟 钱 过 不 去 ...selling at such a low price... bad timing...
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student
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10-Apr-2013 20:18
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Institutional fund managers (ie. Big Boys) may not be interested as its earnings may just be retained indefinitely for themselves (owners), thus there may be no dividend payouts, and causing disillusionment.. As such, out of frustration, many may dump it gradually in stages.
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GorgeousOng
Elite |
10-Apr-2013 19:56
Yells: "Hehehaha...enjoy life n live to the fullest..." |
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Benvenuti nel club Italiano ! Goditi il viaggio!
Welcome to the Italian club! Enjoy the ride!
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student
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10-Apr-2013 19:36
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That is also possible, but if it does, many will buy or average up (ie. buy more) rather than treat it as a peak.
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edwinjup
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10-Apr-2013 18:15
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Just.pick.up.some today after so many brokerage house upgrade to buy....agm .on 23April | ||||
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juzwonder
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10-Apr-2013 17:53
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S'pore Business Review: VARD eyes US$530m Brazilian orders Target wins to ignite an uptick in its share price. According to CIMB, it believes that the lacklustre share price of STX OSV, which has adopted a new brand name, VARD, could be catalysed by sizeable Brazilian orders worth up to US$530m or NOK3bn (translating to 27% of our FY13 order target) in the next couple of weeks. Here's more Given its recent underperformance and sentiment uplift from this headline-win, we upgrade VARD to Trading Buy from Neutral. The stock is not an Outperform as there could be downside risks to the company’slonger-term margins profile. Further, the absence of communications fromthe new majority owner, Fincantieri, could put off longer-term investors. No change to our EPS or target price, still at 8x CY14 P/E, one s.d. above its trading mean. Industry publications report that Petrobras could award contracts for seven newbuild pipe-laying support vessels (PLSVs) in the next few weeks. One source pinpointed 20 April as the cut-off date for announcement. Accordingly, two 300-tonne PLSVs could be contracted to TechnipNorskan, with construction eyed at VARD’s new Brazilian yard, Promar. Yard prices for the two units could total US$560m, or NOK3bn, translating to 27% of our FY13 order target of NOK11bn. Deliveries are expected by late-2016. We think that the looming-win could spark an uptick in share price. YTD, VARD has secured orders of NOK2.4bn (all for subsea vessels). Beyond the headline-win, we highlight that while the Petrobras orders would replenish the order book, they would not contribute meaningfully to 2013’s revenue runrate due to its long delivery. From a margins perspective, the yard pricesfor the Brazil units are expected to be higher than for international-built units with higher tonne tension capacities. This should buffer costs escalations and production bottlenecks in Brazil. With the stock a laggard, we recommend that shorter-term/riskon investors buy before the fact. Also, with the share price at S$1.22 (the offer price), near-term downside risk is limited. It was only recently that the market unanimously decided that the offer price undervalued VARD. Fincantieri only managed to |
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guoyanyunyan
Elite |
10-Apr-2013 16:54
Yells: "uncertainty always exist" |
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...look like someone see no up the Italian company....shoot it down back to $1.23... | ||||
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shareflux
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10-Apr-2013 16:53
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Master Starlene Your posting pushed up VARD today, so power!! 
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guoyanyunyan
Elite |
10-Apr-2013 16:09
Yells: "uncertainty always exist" |
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...can agree with this... but will tomorrow juicy peak be 1.25...
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student
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10-Apr-2013 16:05
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Today there's a good juicy peak (1.24).
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teobl9
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10-Apr-2013 15:56
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STX OSV is a bargain buy, Macquarie Equities Research (MER) believes and states reasons as to why it has an Outperform rating on STX OSV with a 12-month price target of $1.82, 48.6% above the stock’s closing price of $1.225 yesterday.
With the share price overhang removed after the change in major shareholder from STX Corp to Fincantieri (55.63%), and the market underestimating the potential of recovery in vessel orders and margins, MER believes the stock is a bargain buy at 7x 2014E P/E, at a large 15–45% discount to Asian yards. Source: Macquarie Research - 9 Apr 2013 |
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guoyanyunyan
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10-Apr-2013 15:54
Yells: "uncertainty always exist" |
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... good observation.... but this thread going to close down soon...
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NoRiskNoGain
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10-Apr-2013 15:43
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Also notice that when price shoot up, here become lively again.
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guoyanyunyan
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10-Apr-2013 15:28
Yells: "uncertainty always exist" |
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...notice some buying interest is back ...
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starlene
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10-Apr-2013 14:37
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In Nov 2011 when STX OSV was trading at 1.15,Chartnexus showed a downward trend to ipo price of 79cts but it shot up instead.The only time it traded near ipo price was the Oct 2010's N_S Korea tension,haha when I had the chance to buy and sold for good profit although I didn't get at 79cts at all the bulk was 80-90cts but neverthless good profits..the current Italian Co at $1.22 was indeed a steal and I think the only way is up from here. Wednesday, 3 April 2013STX OSVKim Eng on 2 Apr 2013
A steal at current price. We initiate coverage on STX OSV (VARD) with a Buy and TP of SGD1.66, pegged to 9x PER on average FY13-15F earnings. As a quality Norwegian shipyard with a niche in high specification offshore support vessels (OSV), VARD deserves to trade at a premium to Asian OSV yards. The conclusion of its sale to Fincantieri Group removes the overhang on share price, while recovering OSV orders will support an earnings turnaround. With a potential capital upside of 35% and FY13F dividend yield of 4.9% (which can rise to 7.3% in FY15F), the stock is a steal. Depressed by Fincantieri offer. Share price has been de-rated and suppressed due to the lowball offer (SGD1.22/sh) by Fincantieri for STX Group’s 50.75% stake. We suspect that the latter was forced to dispose VARD at such depressed valuations (7.2x FY12 PER/2.0x FY12 P/B) due to financial distress. With the sale concluded, the overhang on share price has been removed and VARD should re-rate positively to at least peer valuation levels. Setting the stage for outperformance. VARD has been conservative in its order win guidance. We believe that the weakened ordering activity from 2H12 is short-term in nature and foresee a pickup towards 2H13. Offshore activities remain fundamentally strong and the need for a more sophisticated and modern OSV fleet is ever increasing as offshore operations grow more complex. In our opinion, the cautious guidance sets the stage for positive surprises when ordering activities pick up faster and stronger than expected. Market underestimates strength of recovery. Order win momentum is the key leading indicator to watch. Near-term earnings growth profile masks the real strength and timing of a turnaround given the lagged effect between order win and revenue recognition. We forecast NOK9.7b/12.8b/13.5b in new order wins for FY13F/14F/15F. We expect an 11% dip in FY13F EPS but a 30%/12% surge in FY14F/15F earnings, which puts our earnings forecasts above consensus for FY14F/15F but lower for FY13F. We believe the market has been overly cautious and underestimated the potential strength of a recovery.
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BummerHuat
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10-Apr-2013 14:37
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Potential catalyst in the coming weeks - CIMB " What Happened Industry publications report that Petrobras could award contracts for seven newbuild pipe-laying support vessels (PLSVs) in the next few weeks. One source pinpointed 20 April as the cut-off date for announcement. Accordingly, two 300-tonne PLSVs could be contracted to Technip-Norskan, with construction eyed at VARD’s new Brazilian yard, Promar. Yard prices for the two units could total US$560m, or NOK3bn, translating to 27% of our FY13 order target of NOK11bn. Deliveries are expected by late-2016. What We Think Orders drive share price performance. We think that the looming-win could spark an uptick in share price. YTD, VARD has secured orders of NOK2.4bn (all for subsea vessels). Beyond the headline-win, we highlight that while the Petrobras orders would replenish the order book, they would not contribute meaningfully to 2013’s revenue runrate due to its long delivery. From a margins perspective, the yard prices for the Brazil units are expected to be higher than for international-built units with higher tonne tension capacities. This should buffer costs escalations and production bottlenecks in Brazil." |
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