VARD Holdings cut to "reduce", target cut to 40 cents by CIMB

Stock Name: Vard
Company Name: VARD HOLDINGS LIMITED

Research House: CIMB

Price Call: SELL

Target Price: 0.40

SINGAPORE (April 10): CIMB has downgraded VARD Holdings to "reduce" from "hold" and cut its price target to 40 cents from 54 cents.

The new target is based on 0.6 times FY2015 book value versus 0.8 times previously.

CIMB has also lowered its earnings per share estimates by 4% for FY2016 and 28% for FY2017 to factor in expected fewer orders.

A low order replenishment rate, less profitable orders and crimped margins from lower operating leverage are likely to lower the shipbuilder's return on equity to 4% from 9% in FY2017, according to CIMB analyst Yeo Zhi Bin.