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Vard Holdings
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Peter_Pan
Supreme |
04-Jun-2013 13:37
Yells: "kopi-o siu dai mai hum!" |
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Dividends There is no change to Vard’s minimum 30% payout policy. We expect a final DPS of 5 Scts for FY13, translating into 4.5% yields, the highest among our O& M small/mid-cap stocks.
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Peter_Pan
Supreme |
04-Jun-2013 13:36
Yells: "kopi-o siu dai mai hum!" |
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Bullish order outlook Vard was markedly positive on its order outlook. If mega-Petrobras orders materialise, there is a strong possibility that its FY13 order intake could beat its annual run rate of NOK12bn. Recall that Petrobras could soon award contracts for seven newbuild pipe-laying support vessels (PLSVs) worth US$6bn in. Upstream reported that Vard’s Promar yard is in line to secure two units, totalling US$560m. This would translate to NOK3bn or 27% of our FY13 order target of NOK11bn. YTD, Vard has secured NOK3.8bn orders. For now, we conservatively keep our assumptions, which would be revised when any Petrobras order materialises. Due to our more bearish order assumptions, our FY14 topline and bottom-line forecasts are 9% and 12% respectively below consensus.
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Peter_Pan
Supreme |
04-Jun-2013 13:35
Yells: "kopi-o siu dai mai hum!" |
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Margins to improve in FY14 Vard is confident that its Brazilian operations in Niteroi would stabilise by year-end. Consequently, we have hopes of margin improvements come 2014. Already, one of the vessels in the Niteroi yard has been delivered, leaving four progressive deliveries for next year. Three of the four should be delivered by 1Q14, and alleviate the drag on the group’s margins. Production bottlenecks in Brazil arise from a tight labour and equipment market. Specifically, the Niteroi yard faces constraints for steel structural work. Increased man and engineering hours as well as a step-up in project management to rectify vessel delays have created cost overruns. Vard is not making any money from its current Niteroi backlog, and we estimate that its EBITDA margins for 2013 could retreat 2.2% pts to 11%. But as its Brazilian cost overruns have been flagged and accrued since 2Q12 and late-delivery penalties are not as bad as its increased costs, there would not be an earnings hit in the quarter when the Brazilian projects are delivered. To illustrate this, two delayed vessels were delivered from its Niteroi yard in 3Q12 and the company achieved a 13.5% EBITDA margin in that quarter. We expect EBITDA margins to climb to 11.5% in FY14, stemming from a scaling of the learning curve for Transpetro orders as well as investing initiatives for its Romanian and Vietnamese yards. Work for eight LPG carriers for Transpetro has started. Vard has subcontracted the construction of the first two hulls to a third-party Brazilian yard, Rio Nave. By end-2014, its new Brazilian yard, Promar, will be constructing six of the projects. We expect yoy margin expansion as critical mass is achieved for its new yard.
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Peter_Pan
Supreme |
04-Jun-2013 13:34
Yells: "kopi-o siu dai mai hum!" |
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Opportunities abound with Fincantieri Joint business opportunities are said to abound as Fincantieri has yards in the US and Middle East which could allow Vard to cross-sell its designs. Likewise, Fincantieri could tap Vard’s yards in Brazil and Vietnam where it does not operate in. Given Vard’s lack of presence in the Gulf of Mexico, some investors enquired whether Vard would consider acquiring/utilising Fincantieri’s US yards to build OSVs for customers eyeing the US market. Due to the Jones Act, vessels traded in US waters have to be built in the US. However, the likelihood of this is low. Existing yards are not ideal for OSV building, due to their configurations. More importantly, they are located at the Great Lakes, in the north-eastern part of the US, at the US-Canadian border. Vard has a marine system division which manufactures and installs vessel electrical systems: Vard Electro. This is an ancillary division which complements Vard’s shipbuilding business. Vard has been selective in selling its proprietary electoral systems, for fear of knowledge transfers. However, it sees more opportunities to sell these to its sister business units within Fincantieri. Similarly, Fincantieri has a marine system unit which designs and manufactures ship propulsions and power generators, and could sell these systems to Vard. These vessel systems are integral to ships and the shipbuilding supply chain. Further collaboration between the two could spur future product innovation. Fincantieri recently created a dedicated offshore business unit (prior to its acquisition of Vard) with a focus on drillships. In collaboration with Norwegian oilfield solutions firm, Aker Solutions, Fincantieri has introduced the next generation of drillships, under the “Overdrill design”. This design allows drilling contractors to drill to a maximum depth of 50,000ft. What Vard could bring to the table is its offshore expertise and project-management skills. Last but not least, Vard could enlarge its customer base through Fincantieri. For example, Italian oil service giant, Saipem, shares the same ultimate parent as Fincantieri. This could help Vard establish a closer working relationship with Saipem. Vard shared that cost synergies are limited as there is little overlap in their mutual operations. For example, a joint procurement centre is not economically viable due to the different specialised equipment needed for their spectrum of products. Even for common raw materials like steel, it makes more economical sense to procure them where the individual yards are located. Also, steel is not a critical cost for OSV building, accounting for only 3-5% of the total cost.
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Peter_Pan
Supreme |
04-Jun-2013 13:32
Yells: "kopi-o siu dai mai hum!" |
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Staying the course Following the takeover of Vard by Fincantieri, investors are generally uncertain about the company’s roadmap. The group has assured that nothing has changed, with regard to corporate structure, management team, roadmap and listing status. Essentially, Vard would be run as an autonomous business unit of the Fincantieri Group. Its management would be retained and is actually considered Vard’s crown jewel, given its close relationships with a core group of Norwegian customers. Additionally, we believe Vard’s group structure would remain the same. We reckon that asset injections/spin-offs by Fincantieri into Vard are highly unlikely, though we do not entirely rule out Vard’s absorption of Fincantieri’s offshore business unit. Hence, Vard would spearhead all offshore activities under the Fincantieri group. Fincantieri’s offshore unit is essentially intellectual property with negligible tangible assets. Vard intends to maintain its industry leadership and keep its yards competitive. Investment programmes are being implemented at its Norwegian, Romanian and Vietnamese yards to improve their productivity. Customers would also be continuously engaged as Vard seeks to be their preferred partner in developing the next cutting-edge solutions for deepwater E& P. For example, Vard recently secured a PSV order with customised features such as a clean-design environmentally dual-fuel LNG/diesel-electric-operated vessel with advanced rescue operations. Fincantieri is contented to keep the listing status of Vard for now. Had it intended to de-list Vard in the first place, it would have offered a slightly more attractive price, rather than its low-ball offer, which only attracted less than 5% of Vard’s share capital from the market. We do not think financing was an issue. Fincantieri had net cash of €480m with bankers’ support as at end-2012 (its acquisition of a 50.75% stake in Vard cost €900m).
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Peter_Pan
Supreme |
04-Jun-2013 13:29
Yells: "kopi-o siu dai mai hum!" |
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An Italian love affair During Vard’s recent non-deal roadshow, we were heartened to learn of numerous opportunities for the company in conjunction with its new parent, Fincantieri. Stronger orders and toplines should compensate for lower margins, providing re-rating catalysts. We keep our FY13-15 EPS and target price, at 9x CY14 P/E (1 SD above its trading mean since listing). Maintain Outperform. Vard is our top pick among small/mid-cap O& M stocks. What Happened We recently hosted non-deal roadshows for Vard in Kuala Lumpur and Singapore, after its 1Q13 results. Head of Investor Relations, Mr Holger Dilling, met 16 institutional funds. Investors wanted to know the potential synergies between Vard and Fincantieri. Mr Dilling suggested that there could be numerous joint business opportunities, including a cross-selling of designs collaboration between the two companies’ marine system businesses and a bigger customer base. Vard’s roadmap, management team and group structure will remain the same. Other topics included margins, Brazilian operating conditions, order outlook and dividend policy. What We Think In terms of technology, markets and culture, we see Fincantieri as a much better fit for Vard than its previous parent, the STX Group. Also, Fincantieri has greater vested interests in the future growth of Vard while the STX Group was only interested in selling the company in the later years of ownership. Mr Dilling also pointed out that Fincantieri adheres to the highest standards of corporate governance, due to its exposure to naval vessels whose end-customers are governmental units. On margins, Vard remains conservative, though it believes that operations should stabilise by year-end. We expect margins to improve in 2014 from a scaling of the learning curve for Transpetro orders as well as investment initiatives for its Romanian and Vietnamese yards. Additionally, Vard was markedly positive on its order outlook. Stronger orders and toplines could compensate for lower margins. What You Should Do Trading at 7.4x Cy14 P/E and 4.3% dividend yields, investors agreed that the stock is cheap, against local OSV companies. Vard is our top pick among small/mid-cap O& M stocks.
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GorgeousOng
Supreme |
04-Jun-2013 13:05
Yells: "Hehehaha...enjoy life n live to the fullest..." |
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K̄ hxthos̄ ʹ c̄ hạ n khid ẁ ā khuṇ s̄ ā mā rt̄ h x̀ ā n p̣ hā s̄ ʹ ā thị y dị ̂ Mị ̀ dị ̂ khuṇ thị y?
sorry, I thought you can read thai. aren't you thai?
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NoMoney
Master |
04-Jun-2013 11:45
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555 y half thai half English haha anyway too Chim pom mai thai
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GorgeousOng
Supreme |
04-Jun-2013 11:35
Yells: "Hehehaha...enjoy life n live to the fullest..." |
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Now NoMoney got a lot money hor!
ต อ น น ี ้ ค น ร ว ย แ ล ้ ว ! Now rich man already!!! 55555! Reā thuk khn chokh dī ! Hahaha! We all good luck!!!
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GorgeousOng
Supreme |
04-Jun-2013 10:59
Yells: "Hehehaha...enjoy life n live to the fullest..." |
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At last I am back in the city! Strong wifi I can connect with you guys! This marlin is going to very fat! Good luck!
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GorgeousOng
Supreme |
04-Jun-2013 10:58
Yells: "Hehehaha...enjoy life n live to the fullest..." |
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Hahaha! ท ี ่ ล ่ า ส ุ ด ผ ม ก ล ั บ ม า อ ย ู ่ ใ น เ ม ื อ ง ! ท ี ่ แ ข ็ ง แ ก ร ่ ง wifi ข อ ง ฉ ั น ส า ม า ร ถ เ ช ื ่ อ ม ต ่ อ ก ั บ พ ว ก ค ุ ณ ! ม า ร ์ ล ิ น น ี ้ จ ะ ม ี ไ ข ม ั น ม า ก ! ข อ ใ ห ้ โ ช ค ด ี ! | ||||
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NoMoney
Master |
04-Jun-2013 10:43
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not really need to break 1.30 to see profit cause I cut lost on hyflux and noble both lose about $ 0.20 each and too advantage avg up. this now avg price is 1.06 still chrap:) . hope dividend got $0.10 then really Swee mak mak
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Blastoff
Elite |
04-Jun-2013 10:34
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What do you think is it true value?
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ozone2002
Supreme |
04-Jun-2013 10:26
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1.195! .. indeed the cheapest O& M play on SGX.. gd luck dyodd
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WanSiTong
Supreme |
04-Jun-2013 10:11
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NoMoney : You entered @ 1.04 ! If you book in the profit, u will have a lot of money!!
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Tempest
Master |
04-Jun-2013 09:57
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Ytd somebody asked me why I keep telling ppl to buy. Vard chiong up again, hopefully my answer has enlighten you... Woohoo!! Kopi $$ to those to bought! Congrats | ||||
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Peter_Pan
Supreme |
04-Jun-2013 09:52
Yells: "kopi-o siu dai mai hum!" |
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Very likely many big institutional investors are getting into Vard everyday.
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Octavia
Supreme |
04-Jun-2013 09:49
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They are make homeless by this counter....lol Sista,pls take care of the homeless.Tsk tsk.
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Peter_Pan
Supreme |
04-Jun-2013 09:44
Yells: "kopi-o siu dai mai hum!" |
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Very positive!
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SFGuyRuleZ
Veteran |
04-Jun-2013 09:28
Yells: "You are your own master.." |
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Congrats to all still vested. All huat liao!! | ||||
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