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SapuraCrest: Tying up with Clough in Australia? Outperform

News Update (published 6 July 2011)

¨ The company announced yesterday that it is in discussions with Clough Ltd for a business acquisition or cooperation for its marine construction business. Clough is an Australian integrated oil and gas company with a market cap of AU$561m.

¨ Clough’s “Marine Construction” business provides solutions to the subsea construction and platforms and pipelines market in the Australasia region. We note from its latest investor presentations that the division suffered significant earnings slowdown in 2HFY10 and a loss in 1HFY11 mainly due to sluggish contract wins which were compounded by start-up costs for its JV with Peritus International (a subsea and floating systems engineering and project management services company) in Jan-10.