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STX OSV - The worst is behind
The STI gapped up 0.1% at open yesterday after good US housing data was announced. However, STX OSV was sold down in the auction and opened 3.4% lower day on day after the company released its financial results after market hours the day before. Fortunately, the stock managed to pare some losses and ended down 2.3% for the day. STX OSV reported 4Q12 profits of NOK124mn, which is a 81% decrease compared to a year ago and 16% below Macquarie Equities Research (MER’s) estimates.
MER released a research report on 26 February, shortly after the company announced its earnings. MERmaintains its 12-month price target of $1.82 and an ‘Outperform’ rating on STX OSV. Some excerpts from the report are shown below.
Impact of earnings
Weak 4th quarter results impacted by one-offs: NOK47m impairment charge was included in depreciation but management could not clarify, given the general offer period. Management commented that they faced operational issues on staff turnover in the new Brazil yard being built. Also, Norway and Vietnam saw lower utilization, which might not continue in MER’s view.
Investors will focus on full year EBITDA margins which were quite good: 2012 earnings before interest, tax, depreciation and amortization (EBITDA) margin came in at 13.2%. 2011 margins of 19.0% were exceptional and not the right comparison. Before 2011, STX OSV used to deliver 5-11% margins. Management had earlier guided for 10-13% margins.
A further decline in margins is built into MER’s estimates: MER is building 12.6% and 12.3% EBITDA margin for 2013 and 2014, respectively.
Robust order book of NOK15.1bn Order inflows should improve in 2013: STX OSV ended 2012 with a robust order book providing revenue visibility for 1.5 years. 2013 has started well with 3 large orders worth NOK2bn received already.
MER is building 5-8% earnings growth annually for next 3 years: Increase in order flows in 2013-14 should lead to 5-8% revenue growth, leading to profit growth in MER’s view. MER is not including synergies from the new parent.
MER’s action and recommendation
Stock will move on new orders Subsea and AHTS showing strength: Offshore Subsea Construction Vessel market has been strong in the past six months. Management commented that the Anchor Handling Tug Supply market is finally showing good signs of recovery. MER expects STX OSV to win 25% more orders vs 2012 in 2013 (NOK 12bn).
Top pick in the space A deep value buy: MER thinks the stock has a price floor of SG$1.22 currently (general offer by Fincantieri). At current price, the stock has a compelling risk/reward at ~7x 2013E price to earnings with ~5% div yield, strategic synergies and earnings per share enhancement along the road from new parent and an improvement in order inflows in 2013.
Source: Macquarie Research - 28 Feb 2013
lol. How to make this emotion? which software?
Octavia ( Date: 28-Feb-2013 17:39) Posted:
tmor surrender? |
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Hard to say... if you dump, what if after you dumped it it chiong?...
But no matter what, stocks is all a mattter of luck...
Octavia ( Date: 28-Feb-2013 17:39) Posted:
tmor surrender? |
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tmor surrender?
Haha! You win lor!
iPunter ( Date: 28-Feb-2013 17:24) Posted:
I am ma hou pao... luckily I dumped @1.315 ... lol... 
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I am
ma hou pao... luckily I dumped @
1.315 ... lol...
any chance to go up again???
Ai jai. Mai Panic
Know than I know why everything UP UP UP but our's hooting counters never UP...........
E& Y is laughing their way to the bank
Chewbecca ( Date: 27-Feb-2013 18:19) Posted:
Hahaha. Yeah concur
iPunter ( Date: 27-Feb-2013 18:12) Posted:
I mean it is common sense for anyone to sell at higher than the offered price,
since the market price is already higher than the offer price...
I can give such a recommendation for free... lol...
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Hahaha. Yeah concur
iPunter ( Date: 27-Feb-2013 18:12) Posted:
I mean it is common sense for anyone to sell at higher than the offered price,
since the market price is already higher than the offer price...
I can give such a recommendation for free... lol...
Chewbecca ( Date: 27-Feb-2013 18:10) Posted:
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I mean it is common sense for anyone to sell at higher than the offered price,
since the market price is already higher than the offer price...
I can give such a recommendation for free... lol...
Chewbecca ( Date: 27-Feb-2013 18:10) Posted:
Who is they?
iPunter ( Date: 27-Feb-2013 18:09) Posted:
Such a valuable piece of recommendation...
I wonder how much they paid for that ... lol...
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Who is they?
iPunter ( Date: 27-Feb-2013 18:09) Posted:
Such a valuable piece of recommendation...
I wonder how much they paid for that ... lol...
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Such a valuable piece of recommendation...
I wonder how much they paid for that ... lol...
LETTER FROM ERNST & YOUNG CORPORATE FINANCE PTE. LTD. TO THE INDEPENDENT DIRECTORS OF STX OSV HOLDINGS LIMITED
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Shareholders may wish to sell their Shares in the open market if they are able to obtain a price higher than the Offer Price, net of related expenses (such as brokerage and trading costs).
In summary, based on our analyses set out in this letter and after having considered carefully the information available to us and based on the market, economic, strategic and other relevant conditions prevailing as at the Latest Practicable Date, we are of the view that the Offer Price and the Options Proposal are, on balance, not attractive and there are generally insufficient compelling reasons to recommend the acceptance of the Offer and the Options Proposal. Accordingly, we advise the Independent Directors to recommend that Shareholders REJECT THE OFFER and that Optionholders REJECT THE OPTIONS PROPOSAL.
IFA report out:
“In summary, based on our analyses set out in this letter and after having considered
carefully the information available to us and based on the market, economic, strategic and
other relevant conditions prevailing as at the Latest Practicable Date, we are of the view
that the Offer Price and the Options Proposal are, on balance, not attractive and there are
generally insuffi cient compelling reasons to recommend the acceptance of the Offer and
the Options Proposal. Accordingly, we advise the Independent Directors to recommend
that Shareholders REJECT THE OFFER and that Optionholders REJECT THE OPTIONS
PROPOSAL.
Shareholders may wish to sell their Shares in the open market if they are able to obtain a
price higher than the Offer Price, net of related expenses (such as brokerage and trading
costs).”
Ya lah... Pakat atau tak pakat pun tak salah-nya... Sebab ta'ada orang pangil orang-orang kechil beli... Betul ka? Kalau dia sendiri mahu beli, dia rugi dia binya pasah lah... GorgeousOng ( Date: 27-Feb-2013 15:04) Posted:
Macam ini pakat lah! Orang kecil semua "pok" hor!!!!
iPunter ( Date: 27-Feb-2013 14:06) Posted:
Just a thought...
What if the E & Y fair price report says the fair price is 99c?...
which still way above the IPO price... 
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Just for sharing... copy from other website
Strong cash balance but no final dividend declared. Excluding the construction loan to fund on-going projects, STX OSV's net cash of NOK1.86bn (SGD404m) is equivalent to SGD0.342/share. There is no change in the dividend policy to pay out 30% of its net profit. In 2012, the company paid an interim dividend of SGD0.130/share, 78% of its FY12 EPS.Outlook: Seeing signs of improvement for large and ultra-large AHTS. The demand for subsea and construction vessels remains robust and management is seeing some signs of improvement in the enquiries for large and ultra-large anchor handling tugs and barges (AHTS). We expect the improvement to lead to more new orders for the company.
Valuation: Maintain BUY with a lower TP of SGD1.82. Following our earnings revision, we lower TP to SGD1.82 from SGD1.96 based on 12x FY13F P/E. Stock trades at 8.6x FY13F P/E, a steep discount to large-cap offshore names. Key downside risk to our view is a successful privatization of the company by Fincantieri.
The E& Y report will not provide a price, will only say if the offer is " fair and reasonable" .
Typically, the IFA report will compare the offer price with the last traded price and the average traded price over a period. They may also compare the valuation (P/E, P/B, EV/EBITDA) with industry peers to justify whether the offer is fair. On all these counts, it is very unlikely E& Y will say the offer price is fair.
They won't compare it with the IPO price as that was in 2010 and already in the past. That's like saying chicken rice last time $1, now $2 chicken rice expensive.
iPunter ( Date: 27-Feb-2013 14:06) Posted:
Just a thought...
What if the E & Y fair price report says the fair price is 99c?...
which still way above the IPO price...
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STXOSV and Yangzijiang is not a fair comparison as they operate in different industries.
While
both are in shipbuilding, Yangzijiang build mass market ships for
the commercial shipping sector, which is currently experiencing a severe
oversupply of ships. Shipbuilders in this sector are bleeding.
STXOSV builds ships for the offshore O& G sector. Demand for such ships depend on E& P expenditure by the oil majors, which is currently strong.
The risk for STXOSV is when shipbuilders like Yangzijiang try to move into the OSV sector to make up for the downturn in commercial shipping. But OSV vessels are more complex and these Chinese companies can't just build up expertise and reputation overnight.
Blanchard ( Date: 27-Feb-2013 13:29) Posted:
| As of now, the price of 1.22 could be a fair value to me if I were to make a crude comparison between STXOSV & Yangzijiang. But I do hope that STXOSV will not be delisted. This is just my thought. |
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