Ezra

Ezra: announced that its Subsea Services (EMAS AMC) and Offshore Support Services (EMAS Marine) divisions have been awarded projects worth ~US$505m. These projects will be executed in the North Sea, Africa, the Gulf of Mexio and the Asia Pacific region. Select key orders include: - LOI for a US$120m project offshore West Africa in 2014, utilizing its flagship heavy-lift vessel, the Lewek Constellation together with the Lewek Express. - US$105m contract awarded by an oil major to support a deepwater project in West Africa - Two other contracts located in the Gulf of Mexico with combined value of US$53m - US$126m contract from Statoil for the transport and installation of floating storage units (FSUs) for the Heidrun and Mariner projects in the North Sea, with an option for a third FSU installation. - 5 time charter contracts for a PSV and 4 AHTS vessels awarded by oil majors and national and independent oil companies, to be carried out in Asia Pacific worth a total of US$102m (incl options), with avg tenor of 2.2yrs. The projects will commence earliest in 2013 and are scheduled to run through to 2016. The project announcements may help offset concern over the weak 3QFYAug13 results. Revenue at US$317.1m, +19% yoy, largely driven by the increase in revenue from EMAS AMC (subsea services). Higher value projects secured by Triyards (marine services) also drove up revenue as it completed three OSVs and commenced construction of 3 self-elevating units . However, net profit plunged 68% to US$7.2m, due to sharp spike in cost of sales (+42%) leading to a 95% collapse in gross profit to US$2.2m. Operations at EMAS Marine (offshore support) were impacted by vessel offhire during various periods of the quarter, and EMAS AMC experience some delays in project execution due to the rescheduling for delivery of some projects for clients and recognition of additional unexpected costs for certain other projects. Nevertheless mgt assuages that since May ’13, performance of EMAS AMC has strengthened significantly, and most of EMAS Marine’s offhire vessels have been redeployed. Mgt remains optimistic on the long term prospects for the O&G industry and the subsea segment. Sees opportunity given the continued significant amount of SURF work in the North Sea (incl subsea tie-backs and other infield installation work), the increasingly strong signs of resurgence in the Gulf of Mexico, and Msia’s enhanced oil recovery program with large contracts involving field and pipeline refurbishment and upgrades. Expects 4QFY13 to remain on track towards a turnaround and s confident that the legacy issues at EMAS AMC have been left behind. Expects to be profitable in the third yr of its initial 3-yr business growth plan for the subsea division. Orderbook remains strong with a backlog in excess of US$2b of contracts spanning the globe as at 31 May ’13. A large proportion of these contracts were secured by the subsea services divison (US$1b in 9MFY13), EMAS won US$446m in new orders). At yday’s close of $1.015, Ezra trades at 13.6x annualized 9MFY13 P/E, 0.7x P/B.