Vard: Daiwa thinks 2015 could be the turnaround year for Vard’s Brazil ops, but lower utilization for European yards may be a drag. Future order wins may remain a challenge, given weak sentiment for its North Sea and Brazil markets.
Daiwa forecasts order wins of NOK6.4b order wins for 2015 (-32%). Daiwa expects management to embark on cost-saving initiatives in the coming 1-2 years with weak order flow no longer justifying high overhead costs.
Daiwa maintains Hold with TP cut to $0.59 from $0.65
Daiwa reduced its TP for Vard by 10% to $0.59 due to lower expected operating margins, as the house reckons that any new orders secured going forward will be of a lower value, as the company places a greater emphasis on orderbook replenishment vs. higher-margin orders.
Major headwind on the oversupply situation of platform supply vessels (PSV) in the North Sea, Vard's primary market, is causing a plunge in day rates (55% y/y in Jan'15) in the large PSV category (>800sqm). This should translate into a reduction of new orders and lower margin projects for Vard.
Daiwa maintains its Hold rating on the counter.
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