Still too early to expect contract awards for MFSVs. In our opinion, it is still too early for investors to expect contract awards for the MFSVs in the near term, given that delivery of the group’s first MFSV is expected in 1HCY2010, and the second, in 2HCY2010. Ezra would typically enter into a contract 3 to 6 months prior to the delivery of the vessel to reduce exposure to potential yard delays.
Introducing FY11 numbers. We have introduced our FY11 numbers, projecting net profit of US$89.0m, which represents a 13% y-o-y increase. This will be driven mainly by full-year contributions from 1) the newbuild 12,000 bhp AHTS; 2) the first MFSV; and 3) the 2 chartered-in liftboats. FY11 will also benefit from the expected commencement of contributions from Ezra’s second MFSV in 2Q11.
Raising Ezra’s TP to S$1.45. Based on normalised early cycle valuation metrics for Ezra, vs. trough valuation previously, we have raised Ezra’s TP to S$1.45. This is based on 10x FY09 PE (prev 8x) for its core businesses, but EOC’s valuation is maintained at 6x FY09 PE due to its high gearing, and market price for its stake in Ezion Holdings. Maintain BUY.
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