Vard Holdings

Vard Holdings: DBSV upgrade to Buy. Recall, last week, Vard announced contracts for three vessels, taking YTD contract wins to about NOK4.6bn for six vessels, or 42% of the house existing full-year order win forecast within the first three months of FY14, way ahead of expectations. Vard is likely to end 1Q-FY14 with an orderbook of around NOK21bn, its highest since 2008. The strong momentum in order wins YTD in FY14 signals the continuing strength in the subsea construction market, as well as a revival in the high-end OSV space. The house think it is time to look beyond any minor earnings hiccups in the next few quarters, where margin outlook is still cloudy owing to the few remaining deliveries its Brazil yard, especially given that higher margin shipbuilding contracts are now flowing in and boosting revenue and earnings visibility in FY15.