STX OSV

STX OSV: CS note that 9M12 revenue of NOK8,605 m represents 71% of consensus FY12 forecasts. Mgt attributed the lower-than-expected rev in 3Q12 to the ‘S-curve effect’, with a lower portion of rev recognised when vessels are close to delivery. 3Q12 EBITDA margin of 13.5% was also slightly below house 14.0% forecast due partly to delays in its yard in Niteroi, Brazil, which was impacted by temporary supplier constraints, bottlenecks in subcontracting activity and high staff turnover. STX OSV delivered two vessels from Niteroi in 3Q12. Of Niteroi’s remaining order book of five vessels, one scheduled for delivery in 4Q12 has been moved to 1Q13. It was noted that there is limited demand for medium-sized and high-end AHTS, as well as high-end PSVs. While a strong subsea construction market continues to drive demand for OSCVs, new order conversion has been less than satisfactory due to a lack of availability and higher cost of financing for ship owners. Overall, house maintain NEUTRAL rating and TP of $1.50, based on 2013 P/E of 8x.