Macquarie

Macquarie has responded to yesterday's forced announcement to the ASX.
Its recommendation is neutral.
Here are some things it says:
1

"H1 pre-tax profit to be ~$55m. This is largely as expected with the Australian vessel business forecast to be solid and the supply base weak. The recent $105m Silja Europa Gorgon win was critical as we expect this contract to dovetail with the Subsea 7 contract enabling the vessel division to maintain revenues into H2 FY15. The supply base is trading below expectations due to lower vessel visits and the recent industrial action"

2

"We continue to see near term vessel tender opportunities across several current projects. These include Gorgon, Wheatstone, Prelude and Ichthys"


3

'Beyond FY15. We believe that as the WA LNG project spending declines, Mermaid’s Australian earnings and revenue will decline with it. Mermaid’s revenue should hold up better than the capex decline indicates due to Mermaid’s high level of long-term production support revenue.  The recent fall in the oil price does not help the medium-term outlook.  Jaya is performing in line with early expectations, however the 5,000BHP AHTS market is challenging. Subsea and large vessel markets remain stable.  We are now forecasting a 15% fall in FY16 revenue and a further 3.4% fall in FY17 revenue before a stabilisation in FY18.

4

"Balance sheet metrics solid. FY14 net debt was $266.1m. This is 1.5x our FY16e EBITDA forecast. Interest cover is forecast to remain strong, partially due to the low interest rate on USD debt taken on to fund Jaya."