Vard (formerly: STX OSV)

[evilbdboi]

Shareholders may wish to sell their Shares in the open market if they are able to obtain a
price higher than the Offer Price, net of related expenses (such as brokerage and trading
costs).

I have always wondered why IFA need to suggest shareholders 'may wish to sell' simply because market price is higher than offer price, without supporting reasons/considerations? Market price might also undervalue the company.

Actually its not just because of the market price...

They did get a lot of supporting reasons, such as the by comparing the PE PB EV/EBITDA ratios vs existing peers, and also the EV/EBITDA vs precedent buyout cases...etc....
you have to read the entire circular to find it. Scroll down.... the supporting is quite a few pages so i wont paste it here.

Now everyone who reads the Circular knows $1.22 is clearly not a fair price... But, do look at Q4 results which showed a sharp drop in earnings... But, the forward statement is cautiously optimistic of a recovery in one of the segment. Hmm... headache...

Q4 drop in earnings was partly due to 2 vessels being delivered in Q113 instead of Q412

[KopiKat]

Q4 drop in earnings was partly due to 2 vessels being delivered in Q113 instead of Q412

Have not looked at the figures in detail but Q412 Revenue is slightly higher than Q312 while Net Profit is only half. May be due to different product mix or declining margins.

---

DBSV report posted in remisiers.org,

Negatives priced in

- FY12 below on poor margins; final DPS omitted
- Subsea robust, signs of improvement in large AHTS segment
- FY13/14F trimmed 7%/6%
- Maintain BUY, TP reduced to S$1.57

FY12 below. 4Q12 core PATMI of NOK151 (-76% y-o-y) brought full year core PATMI to NOK924m (-43% y-o-y), below expectations. While execution in 2012 was generally good, evidenced by the strong 35.7% (-3.0ppt y-o-y) GP margin, persistent operational issues at the Niteroi yard in Brazil and temporary lower utilisation at some yards saw 4Q12 EBITDA margin declining16.8ppts y-o-y to 11.4%, with FY12 margin of 13.2% (-5.8ppt y-o-y). Together with slower than expected orderbook drawdown, this led to disappointing FY12 results. A final dividend was omitted. An interim DPS of 13Scts implies a payout of ratio of 77.5% and a FY12 yield of 9.9%.

Subsea robust, signs of improvement in large AHTS segment. The subsea market remains robust, with the award of three OSCV orders YTD from repeat customers worth an estimated NOK2.5bn. These latest orders underscore the sustained activity levels in this segment, as highlighted in our previous notes. Industry newsflow indicate that STX OSV remains in the running for pipelay support vessels (PLSVs) for Petrobras. Management also notes early indications of returning demand for large and ultra large AHTS. As such, we keep our FY13/14F order wins assumptions of NOK12.5bn/NOK14bn.

Maintain BUY, TP lowered to S$1.57. We trim our FY13/14F by 7%/6% on a lower than expected FY12 order intake, and a - 0.4ppt cut to our FY13/14 EBIT margin assumption. While we believe the emergence of Fincantieri as the new parent of STX OSV is positive in the longer term, we lower our target valuation multiple to 9x (prev 11x) FY13 PE to factor in near term uncertainties (e.g. change in dividend policy) and better visibility pending the closing of the GO and the subsequent unveiling of Fincantieri's plans for the group. In line with a reduced FY13F, our TP is lowered to S$1.57. Nevertheless, STX OSV remains a key proxy to the buoyant subsea market while negatives appear to have been priced in, with current valuations below historical mean. Maintain BUY.

[Retired@52]

I bought BRC in May 2008 @ $0.13 and out of fear of being delisted; I accepted the unconditional offer in Oct 2008 @ $0.11. I lost 19% on this stock in 5 months. Today its share price is trading @ $0.187 and they’ve been paying high dividends for the last few years.

I got an unconditional offer by WingTai in July 2012 @ $1.39 per share, I refused to accept the offer and its share is now trading @ $1.90 (I would have less gain 30% in 7 months)

I voted against the Offer by ST Engineering to delist NeraTel at $0.45 in June 2012 and I’m glad that we the minority shareholders had won.

ST Engineering failed to delist NeraTel at $0.45 and we later received a Dividend of $0.04 on 3rd Aug 2012 and its share price now stands at $0.65 (Gain 44% in 9months)

I bought STX OSV in April 2012 @ $1.71. How can I accept an offer of $1.22 (Lost of 28% with 1 year)?

If they call for a meeting, I’m definitely going to vote AGAINST and hope that many minority shareholders do likewise.

The Value of this share is underpriced. I just added another 30 lots of STX OSV yesterday @ $1.255

[paullow]

my advice is that u need to know what is the intrinsic value of the stock at the purchase price. if the value is lower than ur purchase price, any conditional offer if it comes, chances that it will be below ur take in price. look at brc n stxoxv.. they are alike. both trading abive their intrinsic value. look at wingtai...its undervalued so any offer price will likely be higher than the current trading price. stxsv nav is ard 65c. what are the points for this counter to be undervalued?
my humble opinion.

[KopiKat]

I bought BRC in May 2008 @ $0.13 and out of fear of being delisted; I accepted the unconditional offer in Oct 2008 @ $0.11. I lost 19% on this stock in 5 months. Today its share price is trading @ $0.187 and they’ve been paying high dividends for the last few years.

I got an unconditional offer by WingTai in July 2012 @ $1.39 per share, I refused to accept the offer and its share is now trading @ $1.90 (I would have less gain 30% in 7 months)

I voted against the Offer by ST Engineering to delist NeraTel at $0.45 in June 2012 and I’m glad that we the minority shareholders had won.

ST Engineering failed to delist NeraTel at $0.45 and we later received a Dividend of $0.04 on 3rd Aug 2012 and its share price now stands at $0.65 (Gain 44% in 9months)

I bought STX OSV in April 2012 @ $1.71. How can I accept an offer of $1.22 (Lost of 28% with 1 year)?

If they call for a meeting, I’m definitely going to vote AGAINST and hope that many minority shareholders do likewise.

The Value of this share is underpriced. I just added another 30 lots of STX OSV yesterday @ $1.255

Sorry, the above was from a new thread but I think it'd be more convenient for future reference to post the reply here.

Yes, the current scenario for STX OSV is very similar to that of Neratel ie. A financially weak controlling majority shareholder (>50%) sells their entire stake to a 3rd party, thereby triggering a Mandatory Offer. The price offered is also below the last traded market price, I guess no choice as financially weak means they have to sell at a discount, else no takers.

But, for those who're expecting to make 30%+ (am using Neratel Offer @ $0.49 vs $0.655 yesterday's close) by betting on a failure of this Mandatory Offer (closes on 13-Mar), do take note of the following differences,

1. Profitability - For Neratel, we were seeing an increasing Revenue + more importantly, Profit from their new MENA territory. For STX OSV, their latest Q4 shows a continued downward pressure on their profitability. Although the forward guidance is cautiously optimistic of a potential recovery in one of their segment, note the huge difference vs Neratel.

2. Balance Sheet - For Neratel, negligible debts + Cash 12.09ct / share. For STX OSV, Debts > Cash.

3. New Controlling Shareholder - For Neratel, I'm expecting them to benefit from their network with potential new biz and especially in the Indonesia mkt. For STX OSV, Fincantieri is expecting to benefit from their technology and expertise. Perhaps there may be some savings in terms of cost due to greater economy of scale in common items, but I'm not so optimistic and can only hope they don't do things that may negatively impact STX OSV... haha..

Despite the above, I've placed my tikam and will be following the outcome closely. Despite the bullish mkt, current share price is likely depressed due to a substantial shareholder (Oz) selling daily, bit-by-bit. Good thing it seems to be well absorbed and has yet to hit the offer price of $1.22.

[kazukirai]

Have merged the threads for convenience.

[KopiKat]

A substantial shareholder, Oz Parties, continues to sell down their holdings. Latest is 6.25% -> 5.8%. I won't be very surprised if they accept the $1.22 Offer for their balance stake before the Offer closes tomorrow.

[Salty]

They sold 6mil+ shares for a 9mil+ day volume.
I agree with you that they might as well just tender the rest.

[thinknotleft]

my advice is that u need to know what is the intrinsic value of the stock at the purchase price. if the value is lower than ur purchase price, any conditional offer if it comes, chances that it will be below ur take in price. look at brc n stxoxv.. they are alike. both trading abive their intrinsic value. look at wingtai...its undervalued so any offer price will likely be higher than the current trading price. stxsv nav is ard 65c. what are the points for this counter to be undervalued?
my humble opinion.

If a shipping-related company is willing to bid $1.22 for stx osv, and given that STX is in need of funds, I would think that the intrinsic value should be higher than $1.22.

Using nav to value stx osv (ship builder) may not be as good as using nav to value wingtai (a propty dev). I guess that stx osv, being a major osv builder, may hve more advanced technology compared to other osv builders. Hence, its intrinsic value should be higher than nav.

In the near term, stx osv shr price wld be affected by Oz sales. I am thinking that Oz sales have less to do with stx osv intrinsic value. Oz might have bought because of the likely takeover event. Since the takeover event has passed, Oz could be unwinding its trade and deploying its funds elsewhere.

[KopiKat]

my advice is that u need to know what is the intrinsic value of the stock at the purchase price. if the value is lower than ur purchase price, any conditional offer if it comes, chances that it will be below ur take in price. look at brc n stxoxv.. they are alike. both trading abive their intrinsic value. look at wingtai...its undervalued so any offer price will likely be higher than the current trading price. stxsv nav is ard 65c. what are the points for this counter to be undervalued?
my humble opinion.

If a shipping-related company is willing to bid $1.22 for stx osv, and given that STX is in need of funds, I would think that the intrinsic value should be higher than $1.22.

Using nav to value stx osv (ship builder) may not be as good as using nav to value wingtai (a propty dev). I guess that stx osv, being a major osv builder, may hve more advanced technology compared to other osv builders. Hence, its intrinsic value should be higher than nav.

In the near term, stx osv shr price wld be affected by Oz sales. I am thinking that Oz sales have less to do with stx osv intrinsic value. Oz might have bought because of the likely takeover event. Since the takeover event has passed, Oz could be unwinding its trade and deploying its funds elsewhere.

Oz got the bulk (18.27%) of their STX OSV shares from a Placement on 8-Jul-11 @ $1.33. Since then, they have collected 3 dividends of 5ct, 10ct & 13ct for a total of 28ct for those shares which they'd held till now. Sometime in Sep-12 (Share Price was $1.5x to $1.6x then), they started aggressively selling down their stake, even before the announcement of STX Europe's agreement to sell their entire stake to Fincantieri in Dec-12.