Ezion Holdings (Ezion) reported a 91.8% YoY rise in revenue to US$52.3m and a 95.7% increase in net profit to US$20.5m in 4Q12, bringing full year revenue and net profit to US$158.7m and US$78.8m, respectively. FY12 revenue and net profit were in line with our expectations, with the latter 5% higher than our full year estimate, but 22% higher than the street’s forecast. With Ezion’s growing balance sheet, we expect the group to pursue a higher gearing in the future for funding of additional contracts. We adjust our earnings estimates to account for Ezion’s recent contract win (18 Feb 2013), and based on blended FY13/14F core earnings, our fair value estimate rises from S$2.05 to S$2.33 (PER of 12x remains unchanged). Maintain BUY.
FY12 results in line with our expectations
Ezion Holdings (Ezion) reported a 91.8% YoY rise in revenue to US$52.3m and a 95.7% increase in net profit to US$20.5m in 4Q12, bringing full year revenue and net profit to US$158.7m and US$78.8m, respectively. FY12 revenue and net profit were in line with our expectations, accounting for 100% and 105% of our full year estimates, respectively. However, FY12 net profit was 22% higher than the street’s US$64.3m forecast.
Contributions from additional assets and QCLNG
Higher turnover was mainly due to higher chartering revenue from the deployment of additional units of service rigs and liftboats, as well contributions from offshore logistic support vessel services with the commencement of the Queensland Curtis LNG (QCLNG) project. We understand that QCLNG accounted for ~14% of 4Q12’s revenue. Overall operating margin was stable at 33.1% in 4Q12 vs 4Q11’s 33.9%.
Expecting more leverage with stronger balance sheet
With Ezion’s growing balance sheet, we expect the group to pursue a higher gearing in the future for funding of additional contracts. Net gearing stood at 0.76x as at 31 Dec 2013. There is a possibility that net gearing may hit 1.0x in mid FY13, after which we expect it to come off.
Increase fair value to S$2.33
More assets will be deployed this year, and higher contributions are also expected from Australia with the commencement of two other major LNG projects as well (Gordon LNG, Australia Pacific LNG). Looking ahead, we expect the group to clinch more contracts, due to the still buoyant outlook. We adjust our earnings estimates to account for Ezion’s recent contract win (18 Feb 2013), and based on blended FY13/14F core earnings, our fair value estimate rises from S$2.05 to S$2.33 (PER of 12x remains unchanged). Maintain BUY.
Ezion Holdings (Ezion) reported a 91.8% YoY rise in revenue to US$52.3m and a 95.7% increase in net profit to US$20.5m in 4Q12, bringing full year revenue and net profit to US$158.7m and US$78.8m, respectively. FY12 revenue and net profit were in line with our expectations, accounting for 100% and 105% of our full year estimates, respectively. However, FY12 net profit was 22% higher than the street’s US$64.3m forecast.
Contributions from additional assets and QCLNG
Higher turnover was mainly due to higher chartering revenue from the deployment of additional units of service rigs and liftboats, as well contributions from offshore logistic support vessel services with the commencement of the Queensland Curtis LNG (QCLNG) project. We understand that QCLNG accounted for ~14% of 4Q12’s revenue. Overall operating margin was stable at 33.1% in 4Q12 vs 4Q11’s 33.9%.
Expecting more leverage with stronger balance sheet
With Ezion’s growing balance sheet, we expect the group to pursue a higher gearing in the future for funding of additional contracts. Net gearing stood at 0.76x as at 31 Dec 2013. There is a possibility that net gearing may hit 1.0x in mid FY13, after which we expect it to come off.
Increase fair value to S$2.33
More assets will be deployed this year, and higher contributions are also expected from Australia with the commencement of two other major LNG projects as well (Gordon LNG, Australia Pacific LNG). Looking ahead, we expect the group to clinch more contracts, due to the still buoyant outlook. We adjust our earnings estimates to account for Ezion’s recent contract win (18 Feb 2013), and based on blended FY13/14F core earnings, our fair value estimate rises from S$2.05 to S$2.33 (PER of 12x remains unchanged). Maintain BUY.
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