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Hope the worst is over for VARD and now resume its climb again..
Vard Holdings Ltd | PDF
Brazilian coup
VARD SP / VARD.SI | NEUTRAL - Maintained | S$0.84 - Tgt. S$0.91
Mkt.Cap: US$783.20m | Avg.Daily Vol: US$5.87m | Free Float: 44.40%
Offshore & Marine | Author(s): Zhi Bin YEO,
▊ After some waiting, Vard has finally secured a blockbuster order for four pipelay support vessels worth NOk6.5bn or US$1.1bn, representing its largest win ever.Factoring this in, we raise our FY13-15 EPS by 3-7%. Our target price, still at 9x CY14 P/E (mean since IPO), rises on our EPS upgrade. However, until investors are fully convinced that execution hiccups in Brazil are fully over, we think a sustained re-rating is unlikely. Hence, our unchanged Neutral rating.
What Happened
Vard has secured an order for four pipelay support vessels (PLSVs) worth NOK6.5bn (US$1.1bn) from the DOF Subsea-Technip JV. Once constructed, these vessels will be chartered out to Petrobras. Two of the vessels, of the VARD 3 05 design, will be delivered from Vard's European operations in 2Q16 and 3Q16 respectively. Another two, of the VARD 3 16 design, will be delivered from Vard Promar in 4Q16 and 2Q17 respectively. The VARD 3 05 vessel will be larger with higher specs. It will measure 151m in length and 30m in breadth, and will carry pipelay towers rated at 650 tonnes. The Brazilian-built VARD 3 05 vessel will measure 139.9m in length and 28m in breadth, and will have 340-tonne capacity.
What We Think
Vard has clinched NOK10.5bn of orders YTD, meeting our target of NOK11bn for the year. We now raise our target to NOK14bn. Owing to fierce competition, we believe margins for the four vessels could be on the lower side, though not diluting the group?s blended profitability too much. We retain our EBITDA-margin expectations of 8% for FY14 and 9% for FY15.Vard has a longstanding relationship with DOF-Technip and is the first and only yard to have successfully delivered two Brazilian-built PLSVs. We think the win demonstrates that Norwegian yards still have a competitive edge in high-end offshore production. Given its recent execution hiccups in Brazil, we are also comforted that the Brazilian-built vessels will have a longer delivery lead time.
What You Should Do
Stay Neutral on a 12-month horizon. We would revisit the stock on stronger orders and earnings.
krisluke ( Date: 12-Aug-2013 12:30) Posted:
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VARD Bags Contracts for Four Pipelayers
Posted on Aug 12th, 2013
Vard Holdings Limited (?VARD?) has secured contracts with joint ventures of DOF Subsea and Technip for the design and construction of four Pipe Lay Support Vessels (PLSVs).
The contracts constitute the largest order in VARD?s history, with an aggregate order value of approximately USD 1.1 billion (NOK 6.5 billion).
Two of the vessels, of VARD 3 05 design, will be delivered in 2Q 2016 and 3Q 2016 respectively. The hulls of these vessels will be built at Vard Tulcea in Romania and outfitted at Vard Søviknes in Norway. The other two vessels, of VARD 3 16 design, will be delivered from Vard Promar in Brazil, in 4Q 2016 and 2Q 2017 respectively.
The award of these prestigious contracts reinforces VARD?s position as a leading provider of large and complex Offshore Subsea Construction Vessels (OSCVs). Through this order, VARD is able to capitalize on its track record, experience and world‐ class design capabilities in Norway as well as its long‐ standing presence and investments in the Brazilian market.
The new designs have been developed in close cooperation with DOF and Technip. The Norwegian built vessels will carry pipe lay towers rated at 650 tons, among the largest ever in the industry. At 340 tons, the Brazilian built vessels will be among the most complex vessels ever constructed in Brazil. Topside equipment for all four ships will be delivered by Huisman of the Netherlands.
CEO and Executive Director Roy Reite commented, ?I look forward to working with DOF and Technip on these milestone projects. VARD yards in both Europe and Brazil being chosen to build these vessels illustrates the value of having a global presence when working with international clients, and bringing leading edge technology to new markets.?
After some waiting, Vard has finally secured a blockbuster order for four pipelay support vessels worth NOk6.5bn or US$1.1bn, representing its largest win ever.
What We Think
Factoring this in, we raise our FY13-15 EPS by 3-7%. Our target price, still at 9x CY14 P/E (mean since IPO), rises on our EPS upgrade. However, until investors are fully convinced that execution hiccups in Brazil are fully over, we think a sustained re-rating is unlikely. Hence, our unchanged Neutral rating.
What Happened
Vard has secured an order for four pipelay support vessels (PLSVs) worth NOK6.5bn (US$1.1bn) from the DOF Subsea-Technip JV. Once constructed, these vessels will be chartered out to Petrobras. Two of the vessels, of the VARD 3 05 design, will be delivered from Vard's European operations in 2Q16 and 3Q16 respectively. Another two, of the VARD 3 16 design, will be delivered from Vard Promar in 4Q16 and 2Q17 respectively.
The VARD 3 05 vessel will be larger with higher specs. It will measure 151m in length and 30m in breadth, and will carry pipelay towers rated at 650 tonnes. The Brazilian-built VARD 3 05 vessel will measure 139.9m in length and 28m in breadth, and will have 340-tonne capacity.
Vard has clinched NOK10.5bn of orders YTD, meeting our target of NOK11bn for the year. We now raise our target to NOK14bn. Owing to fierce competition, we believe margins for the four vessels could be on the lower side, though not diluting the group?s blended profitability too much. We retain our EBITDA-margin expectations of 8% for FY14 and 9% for FY15.
Vard has a longstanding relationship with DOF-Technip and is the first and only yard to have successfully delivered two Brazilian-built PLSVs. We think the win demonstrates that Norwegian yards still have a competitive edge in high-end offshore production. Given its recent execution hiccups in Brazil, we are also comforted that the Brazilian-built vessels will have a longer delivery lead time.
What You Should Do
Stay Neutral on a 12-month horizon. We would revisit the stock on stronger orders and earnings. (Read Report)