Renaissance services announced that a consortium led by Blue Water Shipping, which includes Topaz, has secured a contract to supply and operate 15 vessels for the Tengiz-chevroil (TCO) joint venture in Kazakhstan for a contract value in excess of USD350mn. Under the terms of the agreement, Topaz will commission 15 newly-designed Module Carrying Vessels (MCVs). Revenue to kick start from 2H2018: As per the news details, the vessels will be deployed and commence work from 2Q2018 for a minimum contract period of three years; hence, we expect the revenue to kick start from 2H2018.   But few details are missing: We are still awaiting further details from management regarding i) Topaz stake in the consortium; ii) CAPEX requirement and how to mobilise the funds; iii) Are these entirely new fleets or an up-gradation of few existing fleets? and iv) expected margin from this contract (how this match with the other contract signed with BP during early 2016 for 14 vessels).   Our view: We are positive on the news as it showcases RNS’s ability to secures long-term contracts in the otherwise depressed OSV industry, which also reiterates Topaz’s strong position in the Caspian region. This also matches management’s plan to build new OSV assets only with confirmed contracts. However, we need to get further details from management to comment on how it is going to affect our earnings estimates and FV.   Is the share price rally substantiated? The share price has rallied c70% over the past month – partly due to oil price recovery – and we believe the positive factor from the news might have already built in to its price, in our initial view. Nevertheless the shares trades well above our FV of OMR0.188, and less attractive earnings multiples of 2016e and 2017e P/E of 34x and 26x respectively.   Our key immediate concern on RNS still remains, which are i) Even though oil price recovered from its early lows, the price is still 50% below when RNS commenced most of its long-term contract, which would potentially challenge its existing long-term contract rates in 2016 and beyond (recently-renewed BP contract with a 9% contract cut - we estimate 8% in dip in 2016 day rate on average); ii) the equity dilution from the Mandatory Convertible Bonds (worth OMR2.7mn in August 2016 and further OMR12.7mn MCB’s due for August 2017); iii) any further provisioning on its Topaz assets or its derivatives liabilities; and iv) initial cost impact from Duqm PAC project, scheduled to open in mid-2016. We will likely revisit our estimates once we get further details. (Company disclosure, Sameer Kattiparambil)   Renaissance: OMR0.31 as of 12 May 2016, Rating: Sell, FV: OMR0.19 per share, MCap: USD233 million, RNSS OM / RSC.OM