Background: STX OSV’s (SOH) core business is in building complex customised offshore vessels including platform supply vessels (PSV), anchor handling tug supply vessels (AHTS) and advanced offshore subsea construction vessels (OSCV). It is part of South Korea’s global STX Group.
Recent development: SOH’s relative outperformance vis-à-vis its offshore peers seem to be over, with the stock correcting by 22% over the past two months. Concerns abound that tightening credit could slow down its order flow. Nevertheless, STX OSV is trading at extremely low valuations of some 5.8x forward PER, based on consensus estimates, with target prices ranging from $1.60 to $2.20.
Key ratios…
Price-to-earnings: na
Price-to-NTA: 2.2x
Dividend per share / yield: S0.029 cts / 2.4%
Net cash/(debt) per share: $0.60
Net debt as % of market cap: 50%
Share price S$1.22
Issued shares (m) 1,180
Market cap (S$m) 1,392.4
Free float (%) 31.0
Recent fundraising IPO – $131.6m
Financial YE 31 December
Major shareholders STX Corp – 69.0%
YTD change +7.0%
52-wk price range na
Our view
Announces new NOK750m contract. SOH recently announced a contract win for NOK750m (about US$132m) for the construction of three advanced stern trawlers for Aker Seafoods ASA. This brings its orderbook up to an estimated NOK16b (around US$2.8b) with some NOK4.2b secured this year alone.
But key offshore orders have stagnated. However, this latest contract is for fishing vessels. STX OSV’s offshore order flows have abated since June, when it secured a NOK1.2b for two anchor handlers. This is even earlier than the cessation of new offshore orders seen at Keppel Corp and Sembcorp Marine (SMM). But it is not surprising as equipment owners get skittish about new orders in times of economic uncertainty and when oil prices are volatile.
Decent backlog to tide it through. In analysing SOH’s outstanding orderbook and therefore its ability to ride out the lull, our comparison versus other offshore yards shows its orderbook over its FY10 sales at a healthy 1.3x, which is comparable to SMM but behind Keppel’s 1.7x. On balance, we do not believe SOH’s discount to these peers is justified, but broader negative sentiment towards the sector will continue to depress its share price.
No comments:
Post a Comment