Ezion Holdings (Ezion) reported a 21.1% YoY rise in revenue to S$38.6m and a 24.4% increase in net profit to S$16.1m in 3Q12, such that 9M12 net profit accounted for 78% of our full year estimates, in line with our expectations. Operating margin in 3Q12 was slightly higher at 38.3% vs 37.0% in 3Q11. Meanwhile the group has entered into a JV which has secured contracts worth US$298m to provide two service rigs over a seven-year period (ROE ~42.7%). The constant flow of contracts illustrates the demand for Ezion’s expertise and assets, which we find very encouraging. We increase our FY13F and FY14F earnings estimates by 13.4% and 9.8%, respectively. This raises our fair value estimate from S$1.53 to S$1.70, still based on 9x FY13F earnings. Maintain BUY.
3Q12 results within expectations
Ezion Holdings (Ezion) reported a 21.1% YoY rise in revenue to S$38.6m and a 24.4% increase in net profit to S$16.1m in 3Q12, such that 9M12 net profit accounted for 78% of our full year estimates. The higher revenue was mainly due to chartering contribution from the additional deployment of a liftboat and a service rig, as well as higher contribution from offshore logistic support vessels segment with the commencement of the QCLNG project. Operating margin at 38.3% in 3Q12 was within expectations, and higher than 37.0% in 3Q11.
Newly formed JV secures contracts worth up to US$298m
Ezion also announced that it has entered into a JV with Kim Seng Holdings Pte Ltd (management of both companies have worked together before), and the JV has secured contracts to provide two service rigs over a seven-year period. The contracts are worth up to US$298m, and the customer is a national oil major in Central America. The rigs will be deployed in the Bay of Campeche and should start work in 1Q13.
Subscription agreement with founder of Labroy Marine
Meanwhile, Ezion has also entered into a subscription agreement with Mr. Tan Boy Tee, formerly the founder and chairman of Labroy Marine. Mr. Tan will subscribe for 10m new shares at an issue price of S$1.2635/share (5% discount to VWAP on 5 Nov). The CEO of Ezion, Mr. Chew, will also sell 10m shares to Mr. Tan at S$1.1305/share (15% discount).
Maintain BUY
The constant flow of contracts illustrates the demand for Ezion’s expertise and assets, which we find very encouraging. Taking the contracts and subscription agreement into account, we increase our FY13F and FY14F earnings estimates by 13.4% and 9.8%, respectively. This raises our fair value estimate from S$1.53 to S$1.70, still based on 9x FY13F earnings. Maintain BUY.
Ezion Holdings (Ezion) reported a 21.1% YoY rise in revenue to S$38.6m and a 24.4% increase in net profit to S$16.1m in 3Q12, such that 9M12 net profit accounted for 78% of our full year estimates. The higher revenue was mainly due to chartering contribution from the additional deployment of a liftboat and a service rig, as well as higher contribution from offshore logistic support vessels segment with the commencement of the QCLNG project. Operating margin at 38.3% in 3Q12 was within expectations, and higher than 37.0% in 3Q11.
Newly formed JV secures contracts worth up to US$298m
Ezion also announced that it has entered into a JV with Kim Seng Holdings Pte Ltd (management of both companies have worked together before), and the JV has secured contracts to provide two service rigs over a seven-year period. The contracts are worth up to US$298m, and the customer is a national oil major in Central America. The rigs will be deployed in the Bay of Campeche and should start work in 1Q13.
Subscription agreement with founder of Labroy Marine
Meanwhile, Ezion has also entered into a subscription agreement with Mr. Tan Boy Tee, formerly the founder and chairman of Labroy Marine. Mr. Tan will subscribe for 10m new shares at an issue price of S$1.2635/share (5% discount to VWAP on 5 Nov). The CEO of Ezion, Mr. Chew, will also sell 10m shares to Mr. Tan at S$1.1305/share (15% discount).
Maintain BUY
The constant flow of contracts illustrates the demand for Ezion’s expertise and assets, which we find very encouraging. Taking the contracts and subscription agreement into account, we increase our FY13F and FY14F earnings estimates by 13.4% and 9.8%, respectively. This raises our fair value estimate from S$1.53 to S$1.70, still based on 9x FY13F earnings. Maintain BUY.
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