Ezion Holdings reported a 37.8% YoY rise in revenue to S$92.6m and a 25.5% increase in net profit to S$45.5m in 2Q14, such that 1H14 net profit met 46% and 43% of ours and the street’s full year estimates, respectively. Results were in line with expectations as we expect more assets to be deployed in 2H14. There were 18 service rigs/liftboats working in the quarter, and four more units should start contribution in 3Q14, followed by another four or five in 4Q14. Meanwhile, Ezion has also proposed a bonus issue of one bonus share for every five ordinary shares. After incorporating some tweaks in our estimates and rolling forward our valuations, our fair value estimate rises to S$2.78 (prev S$2.70), but we expect this to drop to S$2.31 after the bonus issue of shares which will increase the group’s share base. Maintain BUY.
2Q14 results in line
Ezion Holdings reported a 37.8% YoY rise in revenue to S$92.6m and a 25.5% increase in net profit to S$45.5m in 2Q14, such that 1H14 net profit met 46% and 43% of ours and the street’s full year estimates, respectively. Results were in line with expectations as we expect more assets to be deployed in 2H14, resulting in sequentially stronger quarters. There were 18 service rigs/liftboats working in the quarter, and four more units should start contribution in 3Q14, followed by another four or five in 4Q14.
Operational updates
Liftboat Nora (Teras Sunrise) is expected to start work in 4Q14, instead of our earlier assumption of 3Q14. It will be working on short term jobs in SE Asia, before its full potential can be realized in Europe (being a rig that fulfills North Sea ex-Norway standards), probably in 2016. Ezion is also currently securing the extension of the three Curtis Island LNG projects which will be winding down next year. These three projects currently make up US$90m of our FY14F revenue estimate, and we assume a 33% decline in 2015.
Proposes bonus issue
Meanwhile, Ezion has also proposed a bonus issue of one bonus share for every five ordinary shares (book closure date yet to be confirmed). The rationale for this is to increase the accessibility of investing in the company to more investors, thereby encouraging trading liquidity and greater participation by investors, broadening the shareholder base.
FV of S$2.78 to drop to S$2.31 post bonus issue
The group is seeing increased focus on platform and well related work by oil majors in the Asia Pacific, Middle East and West Africa. As such, Ezion will continue to focus on the investment in service rigs to meet the “strong demand”. After incorporating some tweaks in our estimates and rolling forward our valuations, our fair value estimate rises to S$2.78 (12x blended FY14/15F earnings), but we expect this to drop to S$2.31 after the bonus issue of shares which will increase the group’s share base. Maintain BUY.
Ezion Holdings reported a 37.8% YoY rise in revenue to S$92.6m and a 25.5% increase in net profit to S$45.5m in 2Q14, such that 1H14 net profit met 46% and 43% of ours and the street’s full year estimates, respectively. Results were in line with expectations as we expect more assets to be deployed in 2H14, resulting in sequentially stronger quarters. There were 18 service rigs/liftboats working in the quarter, and four more units should start contribution in 3Q14, followed by another four or five in 4Q14.
Operational updates
Liftboat Nora (Teras Sunrise) is expected to start work in 4Q14, instead of our earlier assumption of 3Q14. It will be working on short term jobs in SE Asia, before its full potential can be realized in Europe (being a rig that fulfills North Sea ex-Norway standards), probably in 2016. Ezion is also currently securing the extension of the three Curtis Island LNG projects which will be winding down next year. These three projects currently make up US$90m of our FY14F revenue estimate, and we assume a 33% decline in 2015.
Proposes bonus issue
Meanwhile, Ezion has also proposed a bonus issue of one bonus share for every five ordinary shares (book closure date yet to be confirmed). The rationale for this is to increase the accessibility of investing in the company to more investors, thereby encouraging trading liquidity and greater participation by investors, broadening the shareholder base.
FV of S$2.78 to drop to S$2.31 post bonus issue
The group is seeing increased focus on platform and well related work by oil majors in the Asia Pacific, Middle East and West Africa. As such, Ezion will continue to focus on the investment in service rigs to meet the “strong demand”. After incorporating some tweaks in our estimates and rolling forward our valuations, our fair value estimate rises to S$2.78 (12x blended FY14/15F earnings), but we expect this to drop to S$2.31 after the bonus issue of shares which will increase the group’s share base. Maintain BUY.
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