STX OSV

STX OSV: Reported strong set of 1Q11 results above expectations, with Rev at Nok3.2b, +21% YoY and -10.6% QoQ, while Net Profit at Nok312m, +28% YoY and +6.1% QoQ. Strong performance was attributed to continuing implementation of cost efficiency measures and good project execution, which yielded an EBITDA margin of 13.8% vs 10.8% YoY, while grp continued to benefit from improved integration in the Romania-Norway value chain…..

Reflecting solid project execution, grp enjoyed a high rate of on time deliveries and ended the qtr with a strong cash position of Nok3.1b. New order intake for 1Q11 amounted to Nok1.2b and current orderbook stands at 46 vessels, with 19 vessels remaining for delivery in FY11, under pinning earnings visibility till 2013….

Going forward, grp expects an increase in number of project inquiries due to higher activity level in offshore markets and tip order momentum to accelerate towards 2H11, with day rates in PSV and AHTS segments to pick up. Expect demand for OSCVs to improve, with the trend towards deeper water exploration, to underpin industry growth…..

We note that at current price, valuations appear compelling, with grp trading at an annualized 4.8x FY11E P/E vs historical average of 11x and peers average of 15x. Goldman Sachs reiterates Buy Call with $1.68 TP and CS maintains O/P with $1.80 TP, tipping new order wins and strong qtrly margins, backed by a swelling orderbook to drive growth.