NCL announced that it has sold four platform supply vessels (PSVs) for USD120m  to  a  new  customer  in  Latin  America.  This  brings  its orderbook  to  a  record  MYR1.7bn.  At  USD30m/vessel,  the  PSVs' prices are  well  above  expectations.  Order  momentum  has  clearly  swung  up, and we expect more large contracts in 4QFY13. Maintain BUY, with our TP raised to SGD0.385. 

- Expanding  customer  base;  record  orderbook.  This  news  is  doubly positive, with NCL making further inroad into the Latin American market and  hitting  a  record  orderbook  of  MYR1.7bn  (estimated  MYR1.6bn unrecognised),  giving  the  company  revenue  visibility  for  the  next  15 months. Upcoming contracts will extend this visibility further.

- Vessel  prices  far  higher  than  expected. We  had  used  USD20m/PSV assumptions  in  our  model  in  a  move  to  stay  conservative  on  PSV specifications.  The  four  PSVs  come  with  diesel  electric  propulsion  and are  classed  by  the  strictest  society  Det  Norske  Veritas  (DNV),  which raised their prices to USD30m/vessel. While such expensive equipment will  push  down  margins,  we  think  the  overall  bottomline  will  still  be higher.  Hence,  we  tweak  our  FY14F  earnings  estimates  upwards  by 1.8%.

- Set to break vessel sale record. YTD, NCL has sold 20 vessels, and is set  to  break  the  21-vessel  record  set  in  FY12. While  asset  prices  have remained  stable  with  a  slight  positive  bias,  we  note  that  customers  are shifting towards higher-value vessel types and vessel specifications.

- Huge  upside  from  unrevealed  FY15  shipbuilding  programme.  We are currently only assuming 25 vessels for outright sales in our model for FY15, but this number could exceed 30. The number of vessels in NCL's FY15  programme  will  be  released  in  1QFY14.  At  this  juncture,  we choose to stay conservative and simply flag the upside.

- Maintain BUY, TP raised to SGD0.385. With the much larger orderbook and higher order momentum, NCL's outlook is clearly strengthening. Our TP is raised to SGD0.385, based on 10x blended FY13F/14F EPS.

Source: OSK