STX OSV reported a stellar set of 4Q results, which were above our and the street’s expectations. Revenue declined by 12.9% YoY to NOK3.1bn, while net profit jumped 116.6% to NOK638m during the quarter. The exceptional high profitability in 4Q was mainly due to successful project deliveries and the release of risk contingencies at the end of complex projects. On a full year basis, revenue increased slightly by 4.4% YoY to NOK12.4bn, while net profit increased by 54.6% YoY to NOK1.6bn, supported by stable operations and productivity improvements. The group has recommended a 10 S cents dividend. We maintain BUY and raised our fair value estimate to S$2.25 (from S$1.60 previously) on higher order intake assumptions.
Results above expectations.
STX OSV reported a stellar set of 4Q results, which were above our and the street’s expectations. Revenue declined by 12.9% YoY to NOK3.1bn, while net profit jumped 116.6% to NOK638m during the quarter. The exceptional high profitability in 4Q was mainly due to successful project deliveries and the release of risk contingencies at the end of complex projects. On a full year basis, revenue increased slightly by 4.4% YoY to NOK12.4bn, while net profit increased by 54.6% YoY to NOK1.6bn, supported by stable operations and productivity improvements. The group has recommended a 10 S cents dividend.
Strong order intake in 4Q.
The group’s order intake of NOK6bn in 4Q11 exceeded the total intake for the three preceding quarters (9M11: NOK5bn) and boosted its net order-book to NOK16.7bn as of end-Dec 11. This included the 8 LPG carriers for Transpetro to be constructed at its new yard in Brazil (delivery expected in 2014-16). Despite this, the group remains cautious on the timing for a sustained upturn in order activity. Management noted that although the fundamental outlook for its products is strong, clients are still facing financing constraints due to uncertainty in the financial markets and tightening credit markets.
Maintain BUY with higher fair value estimate of S$2.25.
With the strong order intake in 4Q providing a sufficient base load for the group’s yards, STX OSV should now be on a more stable footing to negotiate the uncertain operating environment. We increased our FY12F revenue and net profits estimates by about 18-36%, on higher order intake assumptions. However, we believe its EBITDA margin will moderate to a more sustainable 12-13% by FY13F, as more of the high-margin orders secured in the previous years are completed. Our fair value estimate is increased to S$2.25 (still on 9.7x FY12F). Maintain BUY.
STX OSV reported a stellar set of 4Q results, which were above our and the street’s expectations. Revenue declined by 12.9% YoY to NOK3.1bn, while net profit jumped 116.6% to NOK638m during the quarter. The exceptional high profitability in 4Q was mainly due to successful project deliveries and the release of risk contingencies at the end of complex projects. On a full year basis, revenue increased slightly by 4.4% YoY to NOK12.4bn, while net profit increased by 54.6% YoY to NOK1.6bn, supported by stable operations and productivity improvements. The group has recommended a 10 S cents dividend.
Strong order intake in 4Q.
The group’s order intake of NOK6bn in 4Q11 exceeded the total intake for the three preceding quarters (9M11: NOK5bn) and boosted its net order-book to NOK16.7bn as of end-Dec 11. This included the 8 LPG carriers for Transpetro to be constructed at its new yard in Brazil (delivery expected in 2014-16). Despite this, the group remains cautious on the timing for a sustained upturn in order activity. Management noted that although the fundamental outlook for its products is strong, clients are still facing financing constraints due to uncertainty in the financial markets and tightening credit markets.
Maintain BUY with higher fair value estimate of S$2.25.
With the strong order intake in 4Q providing a sufficient base load for the group’s yards, STX OSV should now be on a more stable footing to negotiate the uncertain operating environment. We increased our FY12F revenue and net profits estimates by about 18-36%, on higher order intake assumptions. However, we believe its EBITDA margin will moderate to a more sustainable 12-13% by FY13F, as more of the high-margin orders secured in the previous years are completed. Our fair value estimate is increased to S$2.25 (still on 9.7x FY12F). Maintain BUY.
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