Vard

Vard: Weak 1Q13 results which was below estimates, weighed largely by a drop in margins. Revenue at Nok 2.7b (-2.3% y/y, +9% q/q) while net profit at Nok179m (-34% y/y, +61% q/q) largely due to a drop in Ebitda margins to 11.1% vs 14% y/y. EBITDA margins were lower as the group seeked to stabilize operations at the Niterói yard in Brazil, and rebuild the order book at its Vietnam yard. On a more positive note, the group note that order intake for the quarter at NOK 2.8b represented a more than doubling of the NOK1.3b order intake for 4Q12, and a close to 20% increase from 1Q12. VARD’s order book currently comprises of 46 vessels and stands at NOK15.5b, slightly up from FY12 and mgt remains positive on the outlook for subsea support and construction vessels, noting strong enquiries across various specification. Maybank-KE note that margins appears to have stabilised on a QoQ basis and actions have been taken to reorganise production and reduce indirect cost and investors could expect higher margins in FY14F vs FY13. Latest ratings as follow: OSK maintains Buy with $1.69 TP Macquarie maintains O/p with $1.82 TP CS maintains neutral with $1.10 TP Maybank-KE maintains Buy with $1.65 TP