Kreuz

Kreuz: DBS Vickers believes valuations are unjustifiably cheap, noting 2Q12 net profit of US$13.3m, +29% qoq, was above expectations on accelerated revenue recognition, while 1H12 net profit of US$23.6m was nearly 75% of its FY12 estimate. It expects margins to improve with the 2Q12 acquisition of a diving-support vessel as it eliminates the higher costs of hiring third-party vessels. Year-to-date order wins of US$155m surpassed DBSV's US$150m full year forecast and it does not rule out further upside. It expects FY13 order wins to be similar given the region's robust offshore E&P activity. House sees 2H12 earnings to decline on seasonality factors but still forecasts FY12 net profit growth of 16% and raises FY13 earnings estimate by 5% on potentially better margins, translating to FY11-13 net profit CAGR of 18%. Despite a healthy earnings outlook, the counter has underperformed the market and is still trading below 4x FY13 P/E. It keeps its Buy call with a $0.43 target.