0727 GMT 19 March [Dow Jones] STOCK CALL: Singapore’s offshore-support-vessel sector is recovering as fleet growth ends, CIMB says, expecting 2012 OSV supply to tighten amid influx of rigs. It keeps an Overweight sector call, viewing its 8X forward P/E as undemanding. CIMB expects the small/mid-cap segment’s discount to big-caps, at 45% vs the three-year average 39%, to narrow. It tips STX OSV (MS7.SG) and Ezra (5DN.SG) as best-positioned for an upturn given global exposure and North Sea links. It is more positive on vessel owners, such as Ezion (5ME.SG), Ezra, Mermaid (DU4.SG) and Swiber (AK3.SG), than shipyards as fleet utilization has risen from 2010’s around 60% to 2011’s 70%, with a rise to 80% likely to mean day rates increase meaningfully. It doesn’t expect OSV yards, such as ASL (A04.SG), Jaya (J10.SG) and Otto (G4F.SG), to benefit in upcycle’s early phase, but notes they trade below-book. Its top pick is Ezion on the highest earnings-growth and ROE prospects and cheapest P/E and P/BV terms, rating it Outperform with S$1.09 target.
[I]- Leslie Shaffer, Dow Jones Newswires[/I]