Ezra Holdings Ltd

UOBKayhian on 13 Jul 2015

FY15F PE (x): 4.9
FY16F PE (x): 5.5

Poor performance was within our expectation. Ezra reported a net loss of US$3.0m for 3QFY15. There was a realised loss of US$9.7m on derivative instructions and a doubtful debt write-off of US$3.0m. These were partially offset by a forex gain of US$5.4m. The net impact was a net loss of US$7.3m. Excluding this, Ezra would have posted a net profit of US$4.3m. Nonetheless, Ezra’s profitability is tethering around the breakeven mark. Management expects subsea job awards to resume from October onwards. Ezra’s current orderbook stands at US$1b while its tenderbook is at US$7.7b-8.6b. Job tenders were delayed by the oil price collapse in 4Q14. Based on the current tender activities, management expects contract awards to resume from October onwards. Maintain HOLD with revised ex-all target price of S$0.176. We revise our P/B valuation yardstick to 0.3x 2016F P/B from 0.5x 2016F previously given the marked deterioration of the subsea industry in the last quarter. This translates to a revised ex-all target price of S$0.176.