Technics crossed the magic $20m hurdle this year with an 8.2% increase in the bottom line. FY12 revenue rose  19% to  $149.7m, and the gross margin rose  to  39%  from  37%  last  year  due  to  a  higher  proportion  of  EPCC contracts recognised this year. BUY maintained with TP $1.20. 
 
Norr  Offshore  Group  listing  in  Taiwan  proceeding  smoothly.  We  are expecting  pre-IPO  in  Jan-13  and  IPO  near  the  end  of  the  calendar  year. Meanwhile,  we  have  made  adjustments  to  our  model  as  the  subsidiaries  have been  diluted,  deconsolidated,  and  now  contribute  via  the  Associates  line.  The major line differences are Revenue (which falls to about S$112m in FY13F), the surge  in  Associate  income,  and  Minority  Interest  which  falls  to  nearly  zero.  As EPCC  will  be  a  larger  part  of  revenue,  we  expect  overall  margins  to  improve. Technics will also be in a net cash position from FY13F.

Low-cost  yard  in  Vietnam  profitable,  Batam  yard  busier,  jetty  next  CY.  We understand  that  the  yard  in  Vietnam  is  operating  profitably,  and  operations  in Vietnam  and  Batam  are  being  ramped  up.  After  clearing  some  approvals processes, we expect the jetty in the Singapore  yard to begin operations shortly after the new year. These are the main sources of growth for Technics.

Assume  coverage,  lower  estimates  on  NOG  adjustments. We  are  assuming coverage  on  Technics  from  analyst  Jason  Saw.  Our  PATMI  forecasts  are  also reduced due to a lowering of growth assumptions and the dilution of profits from the  subsidiaries  comprising  NOG,  the  impact  of  which  is  only  slowly  becoming clearer as more information is released to the market.
 
Maintain  Buy  with  TP  $1.20.  Our  valuation  remains  at  12x  FY13F  EPS,  a somewhat  higher  multiple  than  other  companies  in  the  sector  due  to  the  value-unlocking catalyst of the NOG listing. The resultant TP is $1.20, and factoring in the 6'' dividend we expect this year, total upside is 23%.

Source: OSK