Talk is growing that the debt-heavy shipbuilder will be snatched up soon, notes AmFraser.
The brokerage firm cited a recent Korea Economic Daily report that the STX Group chairman, Kang Duk-so, expects the sale to be finalized by April.
STX Group owns the 50.75% controlling stake in STX OSV.
Keppel and SembMarine have both denied involvement in the stake buyout, but AmFraser thinks either company shouldn't be ruled out completely as bid candidates.
What makes the STX OSV stake attractive for potential buyers?
Here's more from AmFraser:
The strong prospects for STX OSV on high global E&P spending were further reinforced by the massive oil discoveries in Barents Sea, as we noted in our report dated 11 Jan 2012. Add to that the strong operations this year, and this controlling stake in its own right should fetch a good premium.
Our P/E-based fair value remains $1.60. Our “true" market-unbiased DCF fair value is $1.72. However, the weak bargaining position of STX Europe implies that the final price could be at a discount to fair value.
The current price is likely a discounted probability-weighted function of the final sale price and the chance that the entire deal falls through, which we must add is non-zero. Hence, we feel that the current market price incorporates a likely sale price in the region of $1.50 to $1.60. We would treat a price higher than this, while not impossible, as a bonus.
Maintain Buy, with a caveat: Conservative investors can consider taking profit and switching to a more deep-value stock like Yangzijiang even now, and especially if the price gets beyond $1.45 where the risk-reward ratio turns highly unfavorable. More aggressive speculators can play this through to the end for the potential final payoff in the short term.
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