STX OSV

STX OSV: is +0.3% at $1.61, extending its run for the 3th consecutive day. Not seeing news flow today, but the stock is likely riding on momentum following analyst stock calls earlier this wk. On Monday, Macquarie initiated at Outperform with TP $2.16, citing robust industry dynmaics, exceptionally strong balance sheet, high dvd yield and cheap valuations. Yday, CIMB also noted how Petrobras' intention to lower Brazil local pdtn requirements could bode well for STX OSV, which has operations there. Repost as follows. CIMB maintains Out Perform with $2.09 TP. House note that tasked with accelerating Brazil’s oil production, Graça Foster, the first female CEO of Petrobras, is living up to her namesake as the iron lady of oil. Upstream reported that Petrobras has made an U-turn on the local content requirement for its 7-PLSV tender (comprising of 550-tonne and 650-tonne). The original plans were for all the units to be built locally. It could now be reduced to one Brazil-built and six international-built. The new bids are expected to be submitted by end-Sep. Results could be known by yr-end. House note that the news bodes well for STX OSV, allowing its EU and Vietnam operations to participate in the Brazilian buzz (less the overheated environment). Already, its current Brazil yard is booked till end-2013 and faces space constraints for building multiple units in larger categories. Further, this tender has drawn interests from SOH’s customers including DOF subsea, Technip and Saipem. Positive developments on their part could spill-over to SOH (esp. for close-customer DOF). Separately, note that Petrobras has displayed a greater sense of urgency to meet its production target (this can also be gleaned from its accelerated FPSO-integration awards)