STX OSV

STX OSV: SCB resume coverage after lifting of restrictions and downgrade stock to Hold with $1.30 TP. House acknowledge that STX OSV is one of the top builders of large, complex support vessels. However, it is facing industry headwinds such as over-supply in certain vessel segments and labour issues in Brazil. A decent yield and undemanding valuations, especially EV/EBITDA, should provide price support at current levels. A rise in orders should lift shipyard utilisation in 2014-15 and translate into margin improvement.