STX OSV

STX OSV: Possible positive sentiment, with Grp announcing that it has secured a contract for a large, advanced Offshore Subsea Construction Vessel (OSCV) for Ocean Installer and Solstad Offshore. The contract value amounts to approximately NOK 1.4b. (Note that typical OSCVs built by STX OSV was approx. Nok 600-800m) The vessel is scheduled for delivery in 2Q14 and hull will be delivered from STX OSV in Romania. The contract is subject to board approval by the Norwegian Guarantee Institute for Export Credits (GIEK), expected to be received on or around 20 June 2012. Separately, grp also announced that it has entered into a LOI with Troms Offshore for the design and construction of a Platform Supply Vessel (PSV). The vessel which has been backed by a charter from Statoil is scheduled for delivery in 4Q13. A firm contract is expected to by end June 2012. (While no price was given, based on historical prices we estimate prices could be in range of Nok400-600m) We note that orderwins brings grp’s orderbook to approximately Nok 17-18b, while YTD, grp’s orderwins stands at approximately NOK 5.6-6b, vs FY11 of NOK11.1b, which could alleviate concerns of a slowdown in order wins. Ratings as follow: Citi maintains Buy with $1.90 TP DMG Maintains Buy with $2.05 TP OCBC maintains Buy with $2.00 TP Nomura maintains Neutral with $1.73 TP.