STX OSV

STX OSV: Weak set of 4Q12 results which were below estimates. Rev at Nok 2.5b, -19% yoy and +3% qoq, while net profit at Nok 111m, -83% yoy and -51.3% qoq. Result brings FY12 rev to Nok11.1b, -10% yoy and net profit to Nok 889m, -45% yoy. Ebitda margins healthy at 13.2% vs 19% yoy (exceptionally high base in 2011). Poor qtr results was attributed to grp’s operations in Norway, which experienced temporarily lower utilization at some yards, while its Vietnam yards similarly recorded low activity levels in 4Q12. The shipyards in Romania continue to run at high load, and investments in automation and process and efficiency improvements are being implemented with good results. In Brazil, Operations at the shipyard in Niterói continue to affect Group performance & high attention is being devoted to mitigating the effects of high workload and too high staff turnover. Grp’s new Brazilian yard STX OSV Promar, is entering a new phase, and with most major construction works now in place, moving from shipyard construction to establishing a well-roundedn shipbuilding organization. Recruitment is ongoing, and shipbuilding activities are scheduled to begin in summer of 2013. For the yr, grp secured Nok9.5b worth of orders vs Nok11.1b yoy, and current order book stands at Nok15.1b, vs Nok16.7b yoy. Grp’s orderbook should underpin earnings visibility for the next 2 yrs. Going forward, grp note that mkt for subsea support and construction vessels remained fundamentally robust throughout FY 12, and continues to be so, as evidenced by the three OSCVs contracted so far within the first quarter of 2013. Based on early signs in the market, demand for large and ultra-large AHTS could pick up during 2013. In contrast, the outlook for high-end PSVs continues to be subdued. Ratings as follow: DMG maintains Buy but lowers TP to $1.82 from $1.96 OCBC maintains Buy with $1.52 TP. (Expect to see improved utilization) CIMB maintains Neutral and cuts TP to $1.38 from $1.47.