DMG initiates STX OSV (MS7.SG) at Buy with a $1.56 target price.

It says the company is in a good position to capture the returning demand for high-end platform supply vessels and offshore subsea and construction vessels, given its leading edge technology and strong market share in the high-end segments.

Adds the firm is set to register 18% core net profit CAGR over FY09-FY12, driven by improvement in project execution and a healthy new order intake. With an existing orderbook of around NOK20 billion ($4.3 billionb), the house forecasts NOK12 billion and NOK15 billion of new order wins in FY11, and FY12 respectively and 9% EBITDA margins.

The house values STX OSV based on 12x FY11 forecast P/E, which is a 30% discount to the average P/E valuation for big-cap offshore marine stocks. The shares are flat at $1.20.