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Vard: Full Speed Ahead!
Tradeable, Tradeable Ideas | 29 May 2014
By: Raymond Leung
Articles (142) Profile
  1. Vard scores two consecutive contract wins from Carlotta Offshore and Island Offshore.
  2. With a total order book of approximately NOK 33.5 billion, Vard breaks record high orders.
  3. Poised for a strong order momentum in 2014, analysts remain bullish towards the company.


Last week, Vard announced two different consecutive contract wins from repeat customers. The first contract was for a platform support vessel (PSV) ordered by Carlotta Offshore (Carlotta) while the other was for an offshore support vessel (OSV) by Island Offshore (Island).

Currently, Carlotta has two similar PSV under construction in Vard which uses its proprietary design. The new vessel is expected to be built in its Vietnam yard and delivered by 3Q15. Although price of the new vessel was not made known, it was estimated to be worth around NOK 500 million.

The second contract came as a surprise for many market watchers due to the high contract value. Island, a long time client of Vard will be paying more than NOK 1 billion for a new OSV. In average, a new OSV would typically cost between NOK 500 million to NOK 700 million.

Island’s new OSV will be scheduled for delivery in 2Q16 at one of the Norway yard. To date, Vard has delivered more than 30 vessels to Island with eight more (including this order) on its way.

Using a conservative estimation of NOK 1.5 billion to value the two new contracts, Vard will break records with a total order book of NOK 33.5 billion. With the strong order momentum for this year, they are expected to win more contracts before the end of FY14.

Coupled with eased worries for the previously troubled Brazilian yards, Vard is in full swing of propulsion. This comes as the four delayed vessels in its Niteroi shipyard returns to schedule while the Promar shipyard reaches its final stage in construction. All other yards (in Romania, Norway and Vietnam) are now running at full capacity.

Analysts from DBS Vickers Research remain bullish towards Vard in view of the prospect of the industry and company. They gave the company a “Buy” call with a potential upside of 0.47 percent.

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

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