Vard Holdings - a stock that saw 54% of its stock value wiped out in 10 months to trade at a low of $0.765 on 22 July from its all time high of $1.66 in September 2012, has risen 4.2% in the last three days.

The move comes on the back of a contract win announced at the start of this week, which is the largest ever in the company’s history. Here is what Macquarie Equities Research (MER) had to say about the win, extracted from the research note published on the same day of the announcement.

Vard won 4 PLSV (Pipe Lay Support Vessel) orders from the consortium of "Technip and DOF Subsea" worth US$1.1bn (NOK6.5bn).

Largest ever orders in the firm's history: Petrobras had placed orders for these 4 vessels with Technip+DOF. MER was expecting the consortium to award 1-2 of these 4 vessels to Vard but they ended up placing all 4 orders with Vard.

2 to be built in Romania/Norway, and 2 in Vard's new yard in Brazil: Hulls of first 2 vessels will be built in Romania and outfitted in Norway to be delivered in 2Q16-3Q16. The other 2 vessels will be delivered from Vard's new yard in Promar and delivered in 4Q16-2Q17.

Largest PLSVs ever to be built in the industry: The two vessels to be built in Romania/Norway will carry pipe lay towers rated at 650 tons, the largest ever in the industry, while the two vessels to be built in Brazil at 350 tons each, will be the largest ever to be constructed in Brazil.

Such high quality orders from high quality buyers re-affirm confidence in one of the world's top "support vessel builders": Vard's yards being chosen to build all 4 vessels by the consortium is a big endorsement of its global presence and quality products, in MER’s view.

MER’s action and recommendation
2013YTD orders have reached NOK10.5bn already; MER believes that after a year of pessimism, this order should work as a big catalyst, in MER’s view. MER’s and street estimates for 2013 order inflow has been between NOK10-11bn, which Vard has already achieved. The earnings downgrade cycle should reverse now, in MER’s view.

Stock at 1.1x 2014E price to book with approx. 25% return-on-equity and approx. 5% div yield: MER considers Vard's current stock price as a very attractive entry point.

MER has an Outperform rating on Vard with a 12-month target price of $1.10.

Source: Macquarie Research - 15 Aug 2013