Ezra Holdings suffers 3-month delay for Lewek Express project

Its subsea order backlog is over US$1.5b.

According to OCBC Investment Research, Ezra said that there is a three-month delay for the Lewek Express (DP Dual-Reel Lay vessel), which will now start work in Jul/Aug 2013.

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In the offshore support division, utilisation rate was at one point lower than 90%, but has recovered since. This was due to administrative issues in India due to the cabotage rule (three vessels were affected), as well as reflagging and maintenance of a few other vessels.

We estimate utilisation rate of about 55% due to 1) slowdown of offshore activities in the North Sea during the winter months, and 2) failure in materialisation of certain plans for vessel utilisation due to changes in clients’ schedules.

Ezra also announced that it has secured four contracts worth close to US$120m, two of which were from the subsea division for work in the Gulf of Mexico and West Africa. The subsea order backlog currently stands at more than US$1.1b.  

According to management, uncertainty in the Eurozone has weighed on sentiment, and project execution and awards have been delayed relative to industry participants’ expectations in 2012 and early 2013.

We have lowered our core earnings estimates for FY13-14 by 8-25% due to the delays and possibly heightened project risks. As such, our SOTP-based fair value estimate slips to S$1.10 (prev. S$1.30).