DJ MARKET TALK: GS Cuts STX OSV Target To S$1.65, Reiterates Buy
10/20/2011 4:18:00 PM
0818 GMT [Dow Jones] STOCK CALL: Goldman Sachs cuts STX OSV (MS7.SG) target to S$1.65 from S$2.15, representing lower valuation multiples following the change in its view on the Singapore shipyard sector to Neutral from Attractive. However, the house reiterates its Conviction Buy on the stock, and says it remains its top O&M pick. "We have a neutral view on the O&M space as while we expect a strong potential recovery in 2013, we do see a slower 2012 outlook ahead. We think the signs of a bottom have yet to truly appear, and hence we prefer to be very selective among the high-CROCI (Cash Return On Capital Invested) stocks that have historically outperformed through the cycle," it says. It adds, STX OSV is its top pick to navigate the slower year ahead due to its strong CROCI profile through 2014, visible positive catalysts (potential OSV orders), above-average earnings visibility, lower-than-peer downside to a return-to-2008 bear case and compelling valuations. The shares are down 4.7% at S$1.125.
STX OSV SECURES CONTRACTS FOR FOUR PLATFORM SUPPLY VESSELS
FOR ISLAND OFFSHORE
Singapore, 30 October, 2011 – STX OSV Holdings Limited (“STX OSV”), one of the major global designers and shipbuilders of offshore and specialized vessels, is pleased to announce that it has secured new contracts for the construction of four Platform Supply Vessels (PSV) for Island Offshore.
The combined value of all four contracts exceeds NOK 1 billion. The first two contracts are expected to become effective in November 2011, and the remaining two in January 2012. All four contracts are subject to financing approvals.
Stock up a mere 1 cent on the news ($1.135) cos:
a. overall market is poised for correction, so this babe likely to fall too.
b. STX parent is looking to sell to raise funds for its own cash-strapped balance sheet. Not so soon, maybe next year, cos there is an agreement with another major shareholder that prevents it from selling out now.
CIMB today said rumours are swirling again that its parent, the STX Group, is looking to sell its stake in STX OSV early next year. The deal is expected to top more than KRW500bn (S$619m). Sources such as Money Today have reported that the deal could raise KRW700bn (S$787m), which would value the company at S$1.31/share.
oh my god: such a sharp fall of 8 cents today to close at $1.05.
I will pick it up below $1.00, just to play safe. this is a volatile market, need a good margin of safety.
