Ezion Holdings (Ezion) reported a 79.3% YoY rise in revenue to US$54.8m and a 227.8% increase in net profit to US$46.2m in 1Q13. Excluding one-off items, recurring net profit is estimated to be about US$28.4m, accounting for about 20% of our full year estimate. This is within our expectations as we are expecting stronger quarters ahead as more assets are deployed, and additional contributions from the APLNG and GLNG projects. The market continues to focus on how Ezion will use its limited capital to sustain growth, and we expect the group to pursue a higher gearing in the future for funding of additional contracts. We roll forward our valuations, and based on an unchanged peg of 12x on blended FY13/14F core earnings, our fair value estimate rises to S$2.50. Maintain BUY.
1Q13 results within expectations
Ezion Holdings (Ezion) reported a 79.3% YoY rise in revenue to US$54.8m and a 227.8% increase in net profit to US$46.2m in 1Q13. Excluding one-off items such as US$17.8m worth of disposal gains, recurring net profit is estimated to be about US$28.4m, accounting for about 20% of our full year estimate. This is within our expectations as we are expecting stronger quarters ahead as more assets are deployed, and additional contributions from the APLNG and GLNG projects. Gross profit margin remained healthy at 44.9% vs 44.4% in 1Q12.
Operational updates
Long-term contracts for four units out of Ezion’s 20 barges ended last year, and there was no contribution in 1Q13; the group is currently marketing them for work and we understand one more vessel will be coming off-hire in 2Q13. Meanwhile, we expect full contribution from the rig bound for Myanmar starting Jun this year.
Net gearing expected to reach 1.0x by end FY13
The market continues to focus on how Ezion will use its limited capital to sustain growth. As mentioned in our earlier report, 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 increased from 0.76x as at 31 Dec 2012 to 0.83x as at 31 Mar 2013, and this may reach 1.0x in the coming quarters. Interest service coverage stands at 17.5x, with current ratio at 1.55x.
Maintain BUY
We roll forward our valuations, and based on an unchanged peg of 12x on blended FY13/14F core earnings, our fair value estimate rises to S$2.50 (prev. S$2.35). YTD, Ezion’s stock price has appreciated by about 26.6% vs the STI’s 7.8% rise over the same period. However, we still see an upside potential of more than 15% over a one-year time frame. Maintain BUY.
Ezion Holdings (Ezion) reported a 79.3% YoY rise in revenue to US$54.8m and a 227.8% increase in net profit to US$46.2m in 1Q13. Excluding one-off items such as US$17.8m worth of disposal gains, recurring net profit is estimated to be about US$28.4m, accounting for about 20% of our full year estimate. This is within our expectations as we are expecting stronger quarters ahead as more assets are deployed, and additional contributions from the APLNG and GLNG projects. Gross profit margin remained healthy at 44.9% vs 44.4% in 1Q12.
Operational updates
Long-term contracts for four units out of Ezion’s 20 barges ended last year, and there was no contribution in 1Q13; the group is currently marketing them for work and we understand one more vessel will be coming off-hire in 2Q13. Meanwhile, we expect full contribution from the rig bound for Myanmar starting Jun this year.
Net gearing expected to reach 1.0x by end FY13
The market continues to focus on how Ezion will use its limited capital to sustain growth. As mentioned in our earlier report, 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 increased from 0.76x as at 31 Dec 2012 to 0.83x as at 31 Mar 2013, and this may reach 1.0x in the coming quarters. Interest service coverage stands at 17.5x, with current ratio at 1.55x.
Maintain BUY
We roll forward our valuations, and based on an unchanged peg of 12x on blended FY13/14F core earnings, our fair value estimate rises to S$2.50 (prev. S$2.35). YTD, Ezion’s stock price has appreciated by about 26.6% vs the STI’s 7.8% rise over the same period. However, we still see an upside potential of more than 15% over a one-year time frame. Maintain BUY.
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