INVESTORS KEEN TO ride what seems to be the start of a new shipbuilding cycle now have another choice to place their bets: SGX’s first Norwegian offshore company STX OSV which made its Mainboard debut today, opening 7.6% higher than its IPO price at 85 cents. The stock ended lower at 81 cents with 58.7 million shares changing hands.

 

STX OSV designs and builds complex and customised offshore support vessels (OSVs), including platform support vessels and anchor handling tug and supply vessels, and offshore support and construction vessels capable of work in deep waters. It also produces specialised LNG-powered ferries, naval and coastguard vessels, fishing vessels and icebreakers. Its current order book consists of 64 vessels worth about $4 billion to be completed between 2010 and 2013.

The company operates nine shipyards in Norway, Romania, Brazil and Vietnam, generating revenues NOK6.2 billion ($1.3 billion) in the first half of the year, up 25.7% y-o-y. It is a subsidiary of the South Korea-based shipping group — STX Corporation — which also owns the South Korea- and Singapore-listed ship operator, STX Pan Ocean.

 

STX OSV’s equity fund-raising couldn’t have come at a better time. Yards are seeing a rise in orders for commercial seafaring ships as well as offshore rigs and vessels and analysts are predicting the surge in demand could intensity.

 

To further its growth, CEO Roy Reite plans to use a portion of the net IPO proceeds of $131.6 million to build a second yard in Brazil, where it has operated an existing facility near Rio de Janeiro for the past nine years.

 

“We think that it is correct for us to build a better facility in Brazil to protect our market share of 50% there,” Reite tells The Edge Singapore. “We believe we have a very exciting career building vessels that are able to support the extraction of oil at in Brazil’s deepwater pre-salt fields.” The new yard – which will begin delivering vessels by 2013 — is expected to double STX OSV’s building capacity in the Brazilian market.

 

Reite will also channel some proceeds towards growing the company’s yard in Romania, which provides engineering services and produces steel in addition to building ships. “Romania is now our largest facility even though most of our yards and clients are in Norway because it provides us with a source of cheaper labour and land costs,” Reite says. “We have a clear intention to use the money from our IPO to invest more in improving productivity in Romania.”

 

Going forward, Reite’s plan is to extend STX OSV’s presence in the global market as demand improves and liquidity begins to flow freely once again. To that end, he is confident he has chosen the right platform to lift the company to greater heights: “We have listed here in Singapore because investors here have a better understanding of the industry so its easier for us to explain our business to them,” he says.

 

But STX OSV will have to contend with other hot SGX shipping stocks vying for the attention of investors — from blue-chip rigbuilders Keppel Corporation and Sembcorp Marine (Our cover story for this week’s issue 447) to fast-growing Chinese shipyards Cosco Corporation, Yangzijiang Shipbuilding and JES International.

 

Looks like Reite will have his job cut out for him.