Monday 18 November 2013

Ezion Holdings

OCBC on 15 Nov 2013

Ezion Holdings reported a 97.2% YoY rise in revenue to US$76.2m (+13% QoQ) and a 137.2% increase in net profit to US$38.2m (+5% QoQ) in 3Q13, with 9M13 net profit accounting for 77.5% of our full year estimate. There were no major one-off exceptional items in the last quarter. Looking ahead, Ezion is likely to focus more on the ASEAN region as it sees good growth in this area. There will also be an emphasis on newbuilds instead of refurbished units. The group is also pursuing opportunities to support LNG related projects in Australia and its vicinity. We roll forward our valuations with an unchanged P/E of 12x (based on FY14F core earnings), which increases our fair value estimate from S$2.42 (adjusted for bonus issue) to S$2.57. Maintain BUY.

3Q13 results in line
Ezion Holdings reported a 97.2% YoY rise in revenue to US$76.2m (+13% QoQ) and a 137.2% increase in net profit to US$38.2m (+5% QoQ) in 3Q13, with 9M13 net profit accounting for 77.5% of our full year estimate. Core 9M13 net profit represented 74.6% of our full year estimate, in line with our expectations. There were no major one-off exceptional items in the last quarter. 

Healthy revenue growth and good margins
Revenue was higher in the quarter mainly due to 1) higher chartering contribution with the deployment of additional liftboats and service rigs, as well as 2) higher revenue from the offshore logistics vessels services segment with the QCLNG, APLNG and GLNG projects in Australia. Gross margin remained strong at 48.2% in 3Q13, similar to 3Q12, but higher than 2Q13’s 46.3%. Margins are likely to remain healthy as Ezion utilises more of its own vessels (therefore reducing usage of third party vessels) to execute chartering contracts in Australia. 

More assets to be deployed
Looking ahead, we are expecting three more liftboats/service rigs to contribute in 4Q13; as at end Sep, Ezion had 15 working units. A rig meant for a Chinese customer (Mar 2012 announcement) for windfarm operations has been delayed from 4Q13 to mid 1Q14 due to issues in the Chinese yard, but we have already incorporated a buffer of three months in our model.

Sticking to the same winning formula but tweaking a little
Looking ahead, Ezion is likely to focus more on the ASEAN region as it sees good growth in this area. There will also be an emphasis on newbuilds instead of refurbished units. Meanwhile, the group is also pursuing opportunities to support LNG related projects in Australia and its vicinity. Meanwhile, Ezion’s stock is up 49.8% YTD vs the STI’s 0.8% flattish performance. We roll forward our valuations with an unchanged P/E of 12x (based on FY14F core earnings), which increases our fair value estimate from S$2.42 (adjusted for bonus issue) to S$2.57. Maintain BUY.

No comments:

Post a Comment