STX OSV

STX OSV: the stock is down 2.7% at $1.08, at a new 52 wk low, and breaking a key $1.10 technical support. The momentum indicators are negative at the moment. The takeover by new parent Fincantieri, and hasty exit of previous significant shareholder Och-Ziff Management, has left the counter’s remaining ~44% float held by a fragmented pool of shareholders, likely a large portion being retail investors. No major recent corporate bad news to highlight. Nevertheless takeaways from the Maybank KE roadshow held yday are as follows, - 2013 will be a "tough" year, with earnings growth to kick in only from 2014 - outlook appears flattish, with operating margins to stay around 11-13% - the Brazil yard is currently a drag on the group; an overheated shipyard industry has resulted in professional and labor shortages, and the yard has been fraught with delivery delays. - the Vietnam yard currently suffers from lack of orders given limited demand for high-spec vessels in Asia - consensus order win estimates at ~NOK 9-11b, which would keep outstanding order book roughly constant - key catalysts are order wins with regard to large-sized Petrobras-related orders (timing unknown), and faster than expected ramp up of its second Brazil yard to alleviate pressures from its first yard. On Fincantieri, - the parent group has an ambition to eventually become a major global shipyard group, - integration is still on-going, but will take time - no indication of M&A angle at this point On valuations, the stock trades at 6.6x P/e, 1.9x P/B, offers 5.2% FY13e yield. 1Q13 results are due 14 May.