CIMB downgrades Otto Marine (G4F.SG) to Underperform from Outperform, cuts target price to $0.30 from $0.48 after lowering FY11-12 earnings estimates by 31%-23%, according to Dow Jones.

Changes reflect risk of more order cancellations by Mosvold, which accounts for 45% of shipbuilder’s orderbook. Notes Mosvold’s cancellation of its first anchor handling, towing & supply order dragged down Otto’s share price in April: “We see cancellation risks in December 2010 and June 2011.”

Notes Mosvold set up during offshore & marine boom in 2007 as “pure and highly leveraged” vehicle to own, operate high-end, large AHTS vessels; “with its vessels under construction, Mosvold is not generating any operating cash flow.” Shares flat at $0.37.