Vard has been trading below 0.900 for about 2 months already after the huge sell down when it broke Critical 1.00 support in July 2013. Has consolidated upwards slowly since end July when it was below 0.800. Have seen it test the 0.900 critical resistance 2 times already over the past month but failed to cross above each time. A slight Ascending triangle pattern formation seen currently and any break up above 0.900 horizontal resistance can see it go to 0.96 to 1.00 quickly. Nobody knows when it will happen so best to plan entry on breakout, monitor closely or set CFD Buy Stop orders to catch it ! High today seen at 0.895. Huge sellers stacked daily at 0.900 so far.
Stop loss at 0.885 on breakout entry.
Maybank KE – 5 September 2013
Vard Holdings: Waiting to Re-rate; Upgrade to Buy, TP $1.12
Ø Upgrade Vard to BUY (from Hold) with higher TP of SGD1.12 pegged to 8x PER on average FY13-15F earnings. In our opinion, current share price has more than priced in the execution issues in its Brazil yards.
Ø Leading OSV owners who are key clients of Vard have expressed high levels of optimism in long-term OSV demand. Vard’s 2013 order wins have also reached our initial expectations and we believe that further order wins would set the stage for a positive re-rating.
Ø Our scenario analysis suggests a bull/bear case TP of SGD1.48/0.80, which makes a compelling investment case based on risk-reward trade-off.
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