Vard Holdings Limited (VARD) reported its 2Q14 results which came in within our expectations. Revenue was flat on a YoY basis at NOK2.9b. However, EBITDA surged 56.2% YoY to NOK189m, and bottom-line reversed from a net loss of NOK20m in 2Q13 to a PATMI of NOK140m in 2Q14. We believe this was due to the absence of cost overruns, coupled with an impairment charge of NOK70m in 2Q13 for one of its Brazilian yards. For 1H14, revenue declined slightly by 1.4% to NOK5.6b, while PATMI jumped 38.1% to NOK232m. This formed 44.5% and 43.2% of our FY14 forecasts.

We expect 2H to come in stronger than its 1H performance. VARD clinched NOK2.7b worth of new orders in 2Q14, and ended the quarter with an order book of NOK21.6b, which would provide visibility to its revenue streams. We will be speaking with management later to get more details. For now, we maintain our HOLD rating and S$1.12 fair value estimate on VARD.

Source: OCBC Research - 22 Jul 2014