Vard (formerly: STX OSV)

[yaosheng]

Hi all,

I took a small stake in STX OSV due to various reasons:
- their projects deal with O&G and that is an industry i feel has bullish prospects
- it is a fairly reputable shipbuilder
- its IPO valuations are fairly muted compared to other sgx shipbuilders (Cosco, YZJ)

After i bought in, its share price took a beating, i assume over Europe debt fears and STX's high gearing. Even contract wins failed to boost price. I was pleasantly surprised when its share price spiked yesterday with large volume. I am wondering if anyone knows any big players buying into this counter or would like to share their views on the stock.

*author is vested in counter*

[Musicwhiz]

After i bought in, its share price took a beating, i assume over Europe debt fears and STX's high gearing. Even contract wins failed to boost price. I was pleasantly surprised when its share price spiked yesterday with large volume. I am wondering if anyone knows any big players buying into this counter or would like to share their views on the stock.

*author is vested in counter*

If you purchased shares in the company based on the business and fundamentals, then the share price should not matter to you unless you intend to increase your stake. If your intention is to sell within a short period of time then the purchase would have been speculative as there is no way a company can grow decently over a short period of time, and short-term market prices as dictated by Mr. Market are highly unpredictable.

[Nick]

STX OSV has won 2 platform supply vessel contracts this week and another similar contract in Feb to give its orderbook a slight boost. Pls take note, that the Group will be declaring its maiden dividend this month (all profits from 25 Oct 2010 - 31 Dec 2010). The Group also secured its license to begin construction of its brazil yard due completion in 2012. The yard will service the yet to be recognized 8 X LPG vessels contract worth 3 billion NOK.

[Nick]

STX OSV SECURES CONTRACTS FOR THREE DIESEL ELECTRIC TWIN SCREW TRAWLERS FOR AKER SEAFOODS ASA

http://info.sgx.com/webcoranncatth.nsf/V...00038A2D6/$file/STX_OSV_secures_contracts_for_3_trawlers_for_Aker_Seafoods_final.pdf?openelement [Press Release]

STX OSV is currently trading at $1.195 per share. It generated EPS of 11.2 SG cents in 1H 2011 and declared an interim dividend of 5.00 SG cents.

(Not Vested)

[Nick]

STX OSV SECURES CONTRACT FOR PLATFORM SUPPLY VESSEL FOR TROMS OFFSHORE SUPPLY

http://info.sgx.com/webcoranncatth.nsf/V...10032F211/$file/STX_OSV_secures_contract_for_Platform_Supply_Vessel_for_Troms_Offshore_Supply.pdf?openelement [SGX Announcement]

STX OSV share price fell sharply in the past month and closed at 89.5 cents. It must be noted that it paid a dividend of 3.0 cents in 2H 10 and 5.0 cents in 1H 11. It generated 1H 11 EPS of 11.5 cents. The key question is whether can it continue to maintain its earnings by securing contracts from key clients over the next few years.

(Not Vested)

[Nick]

The excellent results and another set of massive dividends has sparked a huge rally today. Anyone vested here ? IPO shareholders must be really pleased with this company.

[freedom]

an interesting special situation here, similar to what happened to Jaya before, though the price paid by the buyer is higher than the book value of STX OSV(jaya's offer price was significantly lower than its book value). But could it be a repeat of what happened to Jaya after a failed MGO? Jaya jumped more than 30% after the offer failed.

Another huge jump after failed offer is Neratel.

is there a special situation play in STX OSV? though its PE is quite low(less than 10), it is in a very cyclical business and recently order intake suggests the outlook is not rosy. Its surprisingly high dividends during Q2 probably was a result of parent STX Group being in a financial trouble(that's reason why STX Group is selling STX OSV below market price).

do your own due diligence.

[CY09]

Hi all,

I am evaluating the current company as an investment.
Based on its cashflow OCF-Outflow from investing activities.
I have estimated that dividends will be reduced to 7 cents (32KOR) as the change in major shareholder might be one who is not in urgent need of cash.

In addition, As i am not very proficient in its market, I would like to ask for opinions on the industry prospects (how it will impact this coy), STX OSV market share and position in the industry and insights into current STX OSV mgmt team that VB members might know.

Thank you

[Salty]

i think this company is a special situation investment now.
ie, the GO will fail and interest will come into this counter to re-rate it as it is trading at really low PE.

However, company has not clinched contracts for last quarter. Could be due to the takeover happening.
Outlook for this year is not rosy as there's not enough contract clinched.

I feel that dividends will be cut as well. Last year was exceptional as due to the parent milking it.

[KopiKat]

I feel that dividends will be cut as well. Last year was exceptional as due to the parent milking it.

Dividends vs EPS,

FY12 : Special Interim 13ct + Final ?? vs EPS (9M) = 14.18ct
FY11 : Interim 5ct + Final 10ct = 15ct vs EPS = 29.3ct
FY10 : Interim 5ct + Final 3ct = 8ct vs EPS = 22.59ct

With FY12 Special Interim Div = 13ct, the total dividend payout for FY12 won't be too far off from FY11, despite a much more difficult biz environment... Yes, I agree the STX parent must have been milking them for the past couple of years due to their own financial difficulties (that's likely why they finally sold off their STX OSV stake).

Going forward to FY13, I agree there's a very high likelihood of a much reduced Dividend payout. Perhaps more like FY10 or lower, especially since biz appears to be on a down cycle.

PS. FY12 (Dec) results will be out on 26-Feb

<Vested - Initiated a small tikam last week... but financially, they're nowhere near as attractive as Neratel and the only thing in common is the Mandatory Offer...>

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Useful Links

STX OSV Website

Q312 Results

AR2011

IPO Prospectus

TheEdge Article