Disclaimer and Declaration
The objective of the presentation is for educationalpurposes. The full content of the presentation is forillustration purposes only and should not be used asinvestment recommendations. AB Maximus and itspresenters are not responsible for all investment activitiesconducted by the participants and cannot be held liablefor any investment loss.
The company and presenters may have personal interestin the particular shares presented.
Company Background
STX OSV Vard is is a major global shipbuilder, constructing offshore and specialized vessels used in the offshore oil and gas exploration &
production and oil services industries.
Company Background
Source: Company’s Annual Report 2011
�Company SpecialtiesOSCV
Other Specialized vessels
Company Background
Source: Company’s Q4 Report 2012
�Order Book development: negatives and positives
Industry Overview
�Offshore Market forecast 2013:
Source:http://www.simic.net.cn/news_show.php?lan=en&id=119646
Investment in offshore vessel & facility in 2013 is predicted to record 639 orders, increased by 31% from 489 vessels/units in 2012, according to Clarkson Research and industry sources8..
Mobile offshore fleet has been expanding by 4% in yearly average since 1996, particularly, supply vessel segment, including AHTS and PSV, has grown by about 100% since early 1996.
Industry Overview
Source:http://www.fxempire.com/fundamental/fundamental-analysis-
reports/crude-oil-fundamental-analysis-march-12-2013-forecast/
� Oil prices to remain flat:
Crude Oil is flat moving between small gains and losses as traders are undecided as to what to do in the commodities markets. Equities are down today as traders take advantage of huge climbs to book profits. Crude prices were up at the end of the week on better than expected non-farm payroll data and lower unemployment rate brightened the demand outlook for crude and supported prices.
However poor economic data from China for retail sales and industrial output is likely to keep prices in check. Traders can expect crude oil prices to go slightly up as economic recovery in US and positive German trade balance expected today can support prices.
Industry Overview
Source:http://www.fxempire.com/fundamental/fundamental-analysis-
reports/crude-oil-fundamental-analysis-march-12-2013-forecast/
� Oil prices to remain flat:
Stock Classification
�Cash position: Looks unstable
Source : Company Annual Report 2011
and Q4 report 2012
Stock Classification
� Dividend yield history: Somewhat consistent not sure it will continue.
Source : Company Annual Report 2012
2012 2011
Div per share 0.13 0.10
Share price end year 1.30 1.16
Div yield 10% 9%
ValuationRisk Free Rate 2.5%
Market Required Return 10.0%
Beta 0.83
Cost of Equity (CAPM) 8.73%
Risk Premium for Terminal Value Return
2.0%
Growth Terminal 2%
Growth Initial 4%
Proportion of Debt 0.073
Cost of Debt 2.4%
Proportion of Equity 0.9267
Tax rate 33%
WACC 10.06%
Valuation
Inputs NKR FY 2012:
Item Amt M NKR
OCF 993
Less CAPEX 403
Add Adjustment for extraordinary expense 259
FCFF 849
Valuation
Project 3 years at 4% with 3rd year terminal
Item Amt M Currency
Firm Value 9,757 NKR
Less Borrowings 3,930 NKR
Add Cash 2,437 NKR
FCFF valuation 8,264 NKR
Total Share Outstanding 1,180
Value per share 7 NKR
Covert to SGD /4.64 1.51 SGD
Valuation (P/E Comparison with Peers)
Company P/E
ASL Marine Holdings Ltd 8.72
COSCO 19.17
Dyna Mac Holdings 18.8
Jaya Holdings Ltd 7.81
Nam Cheong 8.73
Yangzijiang 5.01
STX OSV 7.42
Average P/E 10.8
Source: www.markets.ft.com
STX OSV FY 2012 EPS = SGD $ 0.1678Implied FV = 0.1678 x 10.8 = 1.81
Trading Data
52 Weeks Trading Range $1.01 - $1.36
Avg Volume (30 days) 8,383,634
Market Cap $1.45 B
Today’s Price: 1.275
Main Risks
�Market Risk : Oil prices, global economic activity
�Operational risk: Fixed price contracts
�Finance and Investment risk: Forex, Forward contracts for hedging
�Human Resource Risk: High turnover in Brazil
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