Vard

Vard: Entered into a letter of intent with Solstad Offshore for the design and construction of a large Offshore Subsea Construction Vessel (OSCV). The contract will be the largest single vessel order in VARD’s history and the largest in Solstad fleet, with Delivery of the vessel scheduled for 2Q16. No value was given, but given the specs and the size of the vessel, Daiwa is estimating that it could cost at least NOK2bil (US$335m), very sizeable given that typical offshore subseas construction vessel costs ard Nok600. Bring total orders secured to almost Nok4.2b, forming at least 40% of street estimates, and could raise its orderbook to above Nok 20bil, stretching earnings visibility over the next two- three years. Trades at 8.8x P/E and 1.4x P/B which is pretty reasonable, but of course its execution at Brazil remains the key for any upward rerating