VARD

VARD: Daiwa believes the current valuation has largely priced in the company’s order prospects and expected margin recovery in 2014. House lowers rating to Hold, but raises TP to $1.08. Vard’s revenue visibility over 2015-16 is improving, driven by the new orders. Based on its order backlog and announced delivery schedule, it now expects to deliver 17 vessels in 2015 and 12 vessels in 2016. Vard has a healthy net order book worth NOK21.8b (as at end-1Q14), and Daiwa believes the market’s focus in 2H14 will shift to the company’s execution of these orders. The stock is trading at a 2014E PER of 12.4x (around a 30% premium vs. the average of its Singapore-listed peers of 9.3x), which the house reckons as fair, given the sizeable order book and good revenue visibility until 2016.