STX OSV

STX OSV: According to Chinese newswire, 亚太外汇网, STX Group Chairman Jiang, said yday that he expects to complete the sale of STX OSV within this month. When queried about rumors that the sale had fizzled out, he responded that they were completely untrue. Recall, in May this yr, the STX Group was in negotiations with Italy’s Fincantieri on the sale of its 50.75% stake in STX OSV. However both companies were unable to come to an agreement on the price, and market watchers assumed that the deal collapsed. Nevertheless, as STX OSV continued to show improvement in operating performance over the past 2 quarters, some analysts noted that negotiations have actually been on-going. Meanwhile STX Group continues its plans to raise KRW 2.5tr (US$2.3b) in asset sales. The latest being the Oct ’12 sale of a 43% stake in its power-plant unit, STX Energy via existing and new shares to Tokyo based Orix Corp, in which STX Group will raise KRW 360b. The Korean group is seeking funds to repay debt as slumping demand for new vessels damps earnings at its shipbuilding businesses. In addition, STX Group’s three main companies, STX PO, STX Offshore and STX Corp, all of which are interlinked through cross-shareholdings, have KRW 1.49tr in bonds and loans maturing next yr. STX Group has previously mentioned that it stands to receive ~KRW 800b (translates to ~S$900m, or ~$1.50/sh), in the event that a sale is successful. Historically, market talk regarding the stake sale in STX OSV has tended to be a driver of big share price movements in the counter. The co reports 3Q12 results on 14 Nov, after market. Religare, which has a Buy call and TP $1.72, notes that investors should take note of the high ticket vessels that STX OSV has been selling recently, and could compensate for weakness in more traditional OSVs with higher value and more sophisticated vessels.