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Background: STX OSV is one of the leading global designers/shipbuilders of offshore and specialised vessels used in the offshore oil and gas exploration and production, as well as oil services industries. Based in Norway, it operates nine strategically located shipbuilding facilities with five in Norway, two in Romania, one in Brazil and one in Vietnam.
Recent development: Substantial shareholder STX Europe has agreed to sell part of its equity interests in STX OSV to investment funds affiliated with OZ Management LP (Och-Ziff). The placement of 215.59m ordinary shares at $1.33 per share by STX Europe amounts to about 18.27% of the total issued share capital of STX OSV.
Key ratios…
Price-to-earnings: 8.4x
Price-to-NTA: 2.6x
Dividend per share / yield: 3.0 cts / 2.1%
Net cash/(debt) per share: (NOK0.41)
Net debt as % of market cap: 6.2%
Share price S$1.46
Issued shares (m) 1,180
Market cap (S$m) 1,722.8
Free float (%) 26.8%
Recent fundraising Nov 2010 – IPO comprising 180m new shares @ $0.79
Financial YE 31 December
Major shareholders STX Corp – 50.75%, Och-Ziff – 20.0%
YTD change +28.1%
52-wk price range S$0.785-1.495
Our view:
Share overhang removed. As part of the placement, STX Europe also entered into a separate lock-up agreement with Och-Ziff last Friday, whereby it agreed not to dispose of any additional shares in the company until 12 November 2012 subject to certain limited exceptions.
No major surprise. The sale of vendor stake was no surprise to the market, given that STX Europe had been forced to reduce the size of STX OSV’s offering during the latter’s IPO in November last year. This was despite setting the issue price at the lower end of the indicative range as a result of poor equity market conditions then. Post the placement exercise, STX Europe will continue to retain a majority stake of 50.75% in STX OSV while Och-Ziff’s shareholding will increase to 20.0%.
Order momentum to continue. Going forward, STX OSV is well-positioned to ride the OSV upcycle, possibly in FY12, given its technical capabilities and established track record with customers. The stock currently trades at an undemanding valuation of 8.4x FY11 and 8.2x FY12 consensus PER.
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