Vard Holdings Limited (VARD) announced that it has been awarded a new contract for the design and construction of one multifunctional Platform Supply Vessel (PSV) for E.R. Offshore, which is a Germany-based company managing a fleet of 13 PSVs and AHTS. This will be a 4,000 DWT PSV using VARD‟s internal 1 08 design, and will be prepared for standby, rescue, fire fighting and oil recovery operations. Delivery is scheduled from VARD‟s Vietnam yard in 2Q16.

This is a positive as its Vietnam yard has now secured its third contract this year, which would help to improve its utilisation rate and load situation. This yard was operating at a sub-optimal level in 4Q13. Although the contract value was not disclosed, we estimate that it is worth ~NOK300m, and will boost VARD‟s YTD order wins to ~NOK8.5b, or 66% of our FY14 order forecast. We maintain our HOLD rating and S$1.12 fair value estimate on VARD, pegged to 10x blended FY14/15F EPS.

Source: OCBC Research - 16 Jul 2014