STX OSV

STX OSV: CIMB has Trading Buy Call on the counter with $1.38 TP. House believe that the lacklustre share price of STX OSV, which has adopted a new brand name, VARD, could be catalysed by sizeable Brazilian orders worth up to US$530m or NOK3b (translating to 27% of our FY13 order target) in the next couple of weeks. Industry publications report that Petrobras could award contracts for 7 newbuild pipe-laying support vessels (PLSVs) in the next few weeks. One source pinpointed 20 April as the cut-off date for announcement. Accordingly, two 300-tonne PLSVs could be contracted to Technip- Norskan, with construction eyed at VARD’s new Brazilian yard, Promar. Yard prices for the two units could total US$560m, or NOK3b, translating to 27% of house FY13 order target of NOK11bn. Deliveries are expected by late 2016. CIMB note that with the stock a laggard, recommend that shorter-term/riskon investors buy before the fact. Also, with the share price at S$1.22 (the offer price), near-term downside risk is limited.