Shares of offshore vessel builder STX OSV Holdings Ltd dropped as much as 8.3 percent to a five-month low after it posted weaker-than-expected quarterly earnings.
By 0203 GMT, STX shares were down 7.3 percent at S$1.39, but have risen 19.8 percent since the start of the year, compared to the FTSE ST Oil & Gas Index’s 14.4 percent rise.
STX said its third-quarter net profit dropped 39 percent to 228 million Norwegian crowns ($39.6 million), hurt by a fall in sales.
OCBC Investment Research cut its target price for STX to S$1.69 from S$2.00 but kept its ‘buy’ rating. It said STX’s poor performance was mainly due to slower pace of revenue recognition during the end of the shipbuilding phase.
The brokerage noted that STX’s order intake slowed down with only two new vessel contracts secured in the third quarter, insufficient to replenish its orderbook.
“The group reported generally stable operations, but the slowdown in new orders may lead to under-utilization in the Norwegian yards in 2013,” OCBC said.
1006 (0206 GMT) (Reporting by Charmian Kok in Singapore; Editing by Anand Basu; email@example.com)
10:05 STOCKS NEWS SINGAPORE-Olam shares jump 4.8 pct after Q1 results
Shares of commodity trader Olam International Ltd jumped as much as 4.8 percent, recovering from Wednesday’s losses, after it reported a 26 percent rise in its quarterly profit.
By 0133 GMT, Olam shares were up 4 percent at S$1.83, after falling 4.4 percent on Wednesday. Olam has lost 14 percent since the start of the year, compared to the Straits Times Index’s 11.6 percent rise.
Olam shares had fallen 7.9 percent since its competitor Noble reported disappointing third-quarter earnings earlier this month, fuelling concerns about a tough business environment for commodity traders.
“Olam’s results were pretty good, lifting concerns about the company after Noble posted poor results,” said a local trader.
Olam said its first-quarter net profit rose 26 percent to S$43.2 million from a year earlier, which Citigroup said was boosted by strong volume growth in its food staples or packaged food segment. The brokerage tipped 2013 to be a year of recovery for the company.
However, CIMB Research downgraded Olam to ‘neutral’ from ‘outperform’ and cut its target price to S$2.08 from S$2.61, citing potentially weak margins, negative cash flows and higher gearing.
CIMB cut its 2013-2015 earnings per share estimates for Olam to reflect margin pressure from new acquisitions.
The brokerage was surprised at Olam’s aggressive S$1.7 billion capital expenditure budget for 2013 and the first half of 2014, which it said would result in negative free cash flow over the next two years.