Kreuz

Kreuz: DBSV has a BUY, with TP of $0.58, based on 6x FY13 earnings. DBSV expect Kreuz to deliver steady 11% earnings CAGR over FY12-14; current valuation is undemanding, given its earnings delivery track record to date, healthy growth prospects and strong FY13F ROE of close to 25%. House noted that earnings delivery has consistently exceeded expectations in FY12, as Kreuz continued to secure additional work at higher margins from customers, based on their execution track record. Margins improved as the group reduced reliance on third party vessel chartering, with a new vessel acquisition earlier in FY12. Current orderbook stands at US$205m, of which about 90% will be recognised in FY13. The subsea market is expected to register robust growth in future, backed by an increase in the development of oil and gas fields in deeper waters /harsher environments and development of marginal fields which need tie-backs to existing infrastructure.