Ezra Holdings (EZRA SP, 5DN) –

A potential deepwater subsea turnaround play

Last price: S$1.235

Target Price: S$1.53

Ezra is a potential deepwater subsea turnaround play.  Its new vessel, which will be delivered in 1H14, is considered a game-changing asset with state-of-the-art capabilities to execute deepwater jobs. Since it is geared to take on bigger jobs, it could earn US$500m-1b per year. Should it secure its first contract in 1H13, this could be a major share price catalyst for Ezra. The subsea segment will be the key earnings growth driver for the company going forward. It accounted for 56% of FY12 turnover and management expects it to contribute an even bigger 70% in the future. We have a BUY call and target price of S$1.53, based on 9.7x FY14F PE.

UOB Kay Hian 

Swiber Holdings (SWIB SP, AK3) –

Strong foothold in India, Indonesia, and Brunei

Last price: S$0.645

Target Price: S$0.86

2012 has been a bumper year for Swiber. It won around US$1.1b worth of new contracts, 30% more than in the previous year. Currently, its orderbook stands at US$1.4b, of which 40% will be recognised in 2013. Management is still optimistic that more new contracts will follow this year. Swiber has transformed into a regional player with footprints in established oil-producing ASEAN countries as well as in  India  and the  Middle East. This year, it won its maiden project in  Mexico, adding another important market to its business. This extensive footprint allows Swiber to benefit from economies of scale. Our target price is S$0.86, or 6.2x forward PE, and we maintain our BUY call.

UOB Kay Hian