Investing in growth puts pressure on FCF generation
As shown in the table below, Ezra's cash flow generation
has been poor over the past few years. This is attributed to
the group's top-line growth strategy through fleet and
services expansion, as well as opportunistic M&A. During
FY11-12, Ezra has spent quite some money to grow its
subsea fleet following its acquisition of AMC in March 2011.
We expect capex level to come down after the delivery of
Lewek Constellation in 2014. The net outstanding capex on
Lewek Constellation as at end FY12 is estimated at
US$250-300mn, while we assumed annual maintenance
capex to be about US$30-50mn.