Vard wins its first deal of the year estimated at NOK1.3-1.5b

Vessel delivery slated in mid-2016.

According to OCBC Investment Research, Vard Holdings Limited (VARD) announced its first contract win of the year last evening. This entails the design and construction of one Diving Support and Construction vessel (DSCV) for an international customer.

Here's more:

This vessel is of VARD 3 06 design and has a length of 157m, beam of 27m and an accommodation capacity for 150 persons. Delivery of this vessel is slated in mid-2016 from one of its Norway yards.

Although the value of the contract was not disclosed, we believe a ballpark range could be NOK1.3-1.5b, after drawing reference from a recent >NOK1b contract for a DSCV of smaller size secured on 30 Dec 2013 and a NOK1.4b Offshore Subsea Construction vessel contract secured in Jun 2012 with similar basic hull design and of a comparable size.

While we are positive on VARD’s bright start to the year, we maintain our HOLD rating and S$0.84 fair value estimate on the stock (pegged to 8x FY14F EPS), as we believe challenging conditions in Brazil will continue to pose downside risks to its margins and profitability.