Vard

Vard: With no signs of abating, Vard continues its recent streak of contract wins, with the shipbuilder bagging its fifth contract for the quarter. The contract involves the construction for one Offshore Construction and Anchor Handling Vessel for Rem Offshore, and is valued at ~NOK 800m with delivery scheduled in 1Q16 from Norway. The latest order takes Vard’s year-to-date order wins to ~8.5b and its order book to ~NOK23.5b, stretching its delivery schedule into 2016. Maybank-KE believes that Vard is on track for margin recovery as the cost overrun issues at its Niteroi yard in Brazil are resolved, and while the new Promar yard in Brazil may face initial start-up problems, these are likely to be manageable. Separately, we note of conflicting signs by the street on the counter, after a foreign broker recently raised its TP for Vard to $1.45 and added the counter to their Asian Buy list, while in contrast another foreign broker downgraded Vard to Hold from O/p with $1.08 on valuation grounds. At the current price, Vard trades at 11.9x forward P/E and 1.7x P/B. Maybank-KE maintains Buy with TP $1.27