VARD Holdings saw a 4% YoY fall in revenue to NOK 2,128m and an operating loss of NOK 4m in 2Q17, leading to a net loss of NOK 69m for the quarter. This is similar to 2Q16, when the company reported net loss of NOK 67m then.

Compared to 1Q17, revenue was 20% higher but net loss was wider; 1Q17 saw net loss of NOK 25m. This was due to lower financial income and weaker performance from associates. At the end of 2Q17, the order book value was NOK 12.88b, up from NOK 12.65b at the end of 2016 and NOK 11.99b at the end of 2Q16.

Despite the LOI for one exploration cruise vessel (signed in Jan 2017) having expired without resulting in a firm contract, VARD still sees opportunities in this market. The fisheries and aquaculture markets continue to see high activity, but competition is also strong.

Pending an analyst briefing, we maintain our HOLD rating but put our fair value estimate of S$0.23 under review.

Source: OCBC Research - 25 Jul 2017