STX OSV

STX OSV: Announced 3Q12 results which was below estimates, but due largely to normal fluctuations in the project portfolio. Rev at Nok 2.5b, -27% yoy and -24.2% qoq, while net profit at Nok 228m, -39% yoy and -18.3% qoq. Ebitda margins was healthy at 13.5% vs 17.6% yoy, which was an exceptionally high base in 3Q11. Grp continues to register good yard utilization and productivity in Norway and Romania, with its yards running at high load, and an investment program that is underway to improve efficiency and throughput is progressing smoothly. In the Vietnam yard, workload is sub-optimal and likely to remain so during parts of 2013. Grp however note that the recent slow-down in new orders is also likely to lead to periods of under-utilization in Norway next yr. Work on the new yard in Brazil, STX OSV Promar, has progressed well and shipyard construction is at present more than 60% complete. Recruitment is ongoing, and shipbuilding activities are scheduled to begin in the 2Q13, in line with previous estimates. Going forward, grp note that despite the Grp seeing orders for medium-sized and high-end AHTS fall behind expectations on the back of ower-than-anticipated spot and charter rates, and the market for high-end PSVs currently being slow, the subsea construction market continues to drive demand for high-end vessels. We note that 9M 2012 order intake of NOK 8,229m for 14 vessels is well ahead of the NOK 5,090m for 9M 2011, reflecting an increase in average value per vessel as a result of larger and more complex projects. Gro’s total order book stood at NOK 16.4b, underpinning earnings visibility for 2 yrs. Ratings as follow: OCBC maintains Buy but cuts TP to $1.69 from $2.00