(NEUTRAL, S$1.125, TP S$1.20)
Raise FY11 EPS and TP; maintain Neutral. New NOK1.2b contract win from the Norwegian Defence Logistics Organisation (NDLO) for the construction of a research vessel lifted YTD order win to more than NOK7.4b (our estimate) and ahead of our forecast of NOK7b. With this new win, we raise 2011 order win forecast to NOK8.5b (+20%) and upgrade our FY11F EPS by 7%. Our new TP of S$1.20 is pegged to an unchanged FY12 target P/E of 7.2x. We maintain Neutral on the stock given 7% upside to our TP.
The news: NOK1.2b order from NDLO. STX OSV announced that they have secured a NOK1.2b order win for the construction of one research vessel for NDLO. With the latest new order, we estimate 2011 total order win has reached NOK7.4b-7.7b and exceeded our conservative order win forecast of NOK7b (excluding NOK3b from Transpetro). The newbuild research vessel is scheduled to be delivered from STX OSV Langsten in Norway in 4Q14.
Analysis: Higher visibility for FY12; raise EPS. We raise our FY12F EPS by 7% to reflect the big order win from NDLO. Our revised FY12-13F EPS estimates are 9% and 16% below consensus mainly on lower margins as we expect EBITDA margins to normalise to 11% by FY13. Based on our earnings model, 74% of our FY12F revenue forecast is backed by secured contracts. We expect more orders in the next six months to make up the remaining unsecured portion but there could be downside risk if vessel buyers stay away due to uncertainty caused by the European debt crisis. Our revised new order forecasts for FY11-12F are NOK8.5b and NOK10b respectively.
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