STX OSV

STX OSV: Announced very strong 4Q11 results which were way ahead of estimates, coupled with an attractive div payout of $0.10/share, however mgt refused to speak anything abt anything related to a potential sale of grp by its Parent.

Rev at Nok 3.1b, -12.9% yoy and -8.8% qoq, while net profit at Nok 638m, +117% yoy and +72.9% qoq. Ebitda Margins surged to 28.2% vs 11.4% yoy, largely attributed to the release of risk contingencies at the end of complex projects, resulting in Ebitda of $876m, +115% yoy.

Result brings FY11 rev to Nok12.4b, +4% yoy and net profit to Nok 1.6b, +56.2% yoy, while Ebitda margins at 18.9% vs 11.2% yoy. Grp however has guidance that FY11 Ebitda was exceptionally strong, and would expect Ebitda margins to normalize between average of 10-15% going forward.

Strong performance was attributed to Grp’s stable operating performance, improved productivity levels and well-utilized yards, while successful project deliveries and the release of risk contingencies to profit at the end of complex projects contributed to the exceptional financial results.

Going forward, grp remains confident on prospects, citing strong market fundamentals, with oil majors continuing to increase their E&P spending budgets, and sees signs of increasing demand in particular for AHTS and OSVs, but caution that uncertainty remains as to when this will translate into a sustained upturn in new order activity in the OSV mkt, while rate of order conversions is still hampered by constraints in shipowners’ ability to finance new vessel projects.

We note that grp’s fundamentals remain strong, with an orderbook of Nok16.7b, underpinning earnings visibility till 2014, while balance sheet remains strong, with grp in a net gearing position of Nok2.8b (excluding construction financing) Grp has declared a div of $0.10/share, representing an attractive 6.5% div yield. At current price, grp trades at an annualized 5.3x P/E

Ratings as follow:
Cimb maintains O/p with $1.84 TP
Citi maintains Buy and upgrades TP to $1.90 from $1.65
DMG Upgrades to Buy from neutral and raises TP to $2.00