Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED
Research House: Credit Suisse
Company Name: STX OSV HOLDINGS LIMITED
Research House: Credit Suisse
Credit Suisse initiates coverage on STX OSV Holdings (MS7.SG) at Outperform with a $1.55 target. It says despite the stock’s 50% rally since listing in November, “there is still 30% upside as the cyclical recovery in demand for offshore support vessels strengthens going forward.”
The house expects momentum for OSVs to remain strong due to: improving charter rates in 2011, low orderbook/fleet ratio of less than 20% and attractive after-tax returns on newbuilds. “STX OSV should benefit significantly as the largest producer of high-end OSVs,” it says.
It notes strong order momentum should drive outperformance, while valuation and dividend yield are attractive. It says the stock is trading at 9.3X 2011E P/E vs Sembcorp Marine (S512.SG) which is trading at 17.6X and Keppel (BN4.SG) at 14.4X; its own target is based on 12.0X.
The house expects momentum for OSVs to remain strong due to: improving charter rates in 2011, low orderbook/fleet ratio of less than 20% and attractive after-tax returns on newbuilds. “STX OSV should benefit significantly as the largest producer of high-end OSVs,” it says.
It notes strong order momentum should drive outperformance, while valuation and dividend yield are attractive. It says the stock is trading at 9.3X 2011E P/E vs Sembcorp Marine (S512.SG) which is trading at 17.6X and Keppel (BN4.SG) at 14.4X; its own target is based on 12.0X.
It also notes, the company’s 2011 dividend yield of 3.2% is one of the highest in the sector.
Shares are flat at $1.27.
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