First contract: USD165m subsea job in the Norwegian North Sea. EMAS AMC, has secured an engineering, procurement, construction and installation (EPCI) contract valued at USD165m from Det norske oljeselskap ASA. EMAS AMC will perform rigid pipe-lay and subsea related work in the Ivar Aasen field in the Norwegian North Sea. Project management and engineering work will start immediately. Offshore work is expected to start in 2015 and complete in 2016. EMAS AMC also has an option to procure and installation a subsea power cable from the neighbouring Edvard Grieg platform to the Ivar Aasen platform.

Second contract: A Statoil contract in the Aasta Hansteen field. EMAS AMC also won a contract from Statoil for the transport and installation (T&I) of subsea templates in the Aasta Hansteen field, the deepest offshore development in the Norwegian Sea. EMAS AMC will use Lewek Connector for the offshore work which will start in 2015.

Impact: No change in EPS estimates. We have forecasted subsea revenue of USD717m/USD896m/USD1bn in FY13/14/15 respectively. Currently, 80% of our FY13 subsea revenue and 40% of our FY14 subsea revenue are backed by contracts in-hand. We made no changes to our FY13-14F earnings estimates.

Valuation: Maintain Neutral with unchanged TP of SGD1.15. Following a series of earnings disappointment, we prefer to see signs of profitability on the projects secured before turning more positive on the stock. Stock downside is supported by undemanding P/B valuation of 0.83x. Our TP of SGD1.15 is based on 0.85x P/B.

Source: OSK