STX OSV

STX OSV: Annouced strong 4Q results, which exceeded average consensus estimates with Rev at Nok3.6b, -12%YoY and +67.2%QoQ, while Net Profit at Nok 326m, +142%YoY and +111.6%QoQ. Result placed FY10 Rev at Nok11.8b, flat YoY and Net Profit at Nok1.03b, +1034%YoY….

Operating Margins at 10.5% vs 6.1%YoY was attributed to stronger integration and good collaboration between design, engineering and construction in the Romania-Norway value chain, while training programs further contributed to the development of the organization in Vietnam, while Brazil yard has successfully completed several of its technologically most complex projects to date….

Grp enjoyed a high rate of on-time deliveries and was able to deliver several projects ahead of contractual delivery date. New order intake for FY10 almost tripled from NOK 4.5b in FY09 to NOK12.6b, while total order intake for 4Q10 amounted to NOK 2.8b. For 4Q10 alone, grp has secured six additional new vessel contracts, bringing the total for 2010 to 27 new orders…..

Orderbook remains strong at Nok17b underpinning earnings visibility till 2015, and ensuring high utilization rate of grp’s yards. Going forward, grp remains confident on its prospects, and tip order momentum for vessels to improve during the yr as increasing demand for deeper water exploration and operations in harsh environments will continue to drive demand for vessels with advanced specifications …

At current Levels, valuations appear compelling, with grp trading at 5.4x FY10 PE, vs SGX listed peers of 9x and Global peers of 18.8x, which is unwarranted in our view, given grp’s soaring orderbook and specialization in high specs OSVs. Grp has a unaminous Buy Call amg the houses covering it.