Ezra

Ezra: OCBC maintains Buy but lowers TP to $1.40 from $1.48. As tendering activity in the subsea market continues to be buoyant and the industry outlook is set to remain positive, increase FY13 subsea new order wins estimate for Ezra Holdings to US$900m, . At the same time, positive on the impending listing of Ezra’s engineering and fabrication arm, Triyards, as this will allow the latter to tap the debt and equity capital markets independently from Ezra to pursue future growth opportunities. The move may also allow Ezra and Triyards to leverage on each other for business opportunities. Finally, an equity carve-out increases information transparency, improving investors’ understanding of the parent’s firm value. Assuming Triyards trades at 9x FY13F earnings with a share price of $0.78 and estimate that this would lower fair value estimate for Ezra. Shareholders’ approval still has to be sought at an EGM this week.