EMAS Offshore

EMAS Offshore: 4QFY14 net profit slipped 38% y/y to US$3.7m, dragged by the absence of a US$3.2m divestment gain which occurred in 4QFY13. Revenue grew 10% to US$13.5m, mainly buoyed by higher charter rate of its Lewek Conqueror and Lewek Chanceller accomodation and support vessels. We highlight that with the recent completion of a US$520m business combination between EMAS' and Ezra in Oct'14, EMAS acquired 44 offshore vessels from Ezra, with the consideration funded via cash (US$25m), 280.1m new shares (US$370m) and an unsecured loan with Ezra for the remaining US$125m. Subsequently, share base for EMAS will spike from 111m shares as at 31 Aug, to 439.7m shares after completion of its secondary listing on SGX through the issue of 48.6m new shares. Hence, comparisons on a y/y or q/q basis going forward would not be meaningful, given the injection of the newly-acquired assets, coupled with the massive dilution in share capital (+296%). The deal is intended to improve EMAS' business prospects to become an established offshore services provider, with exposure throughout the oilfield lifecycle, spanning exploration, development, production and decommissioning stages. As there is no primary research coverage available on EMAS at this point, it may be hard to provide an estimate on forward earnings or valuations for the company.