- 3Q14 PATMI of USD49.2m missed on delayed contributions from service rigs.
- Adjust FY15E/16E by -1%/2%. TP dips to SGD2.35 from SGD2.38, still at 11x FY15E P/E.
- Maintain BUY. Still our top pick. Blip does not alter growth. Catalysts expected from further penetration of liftboat markets.
3Q14 PATMI of USD49.2m, up 29.0% YoY and 8.2% QoQ, missed expectations on delayed service-rig contributions. 9M14 PATMI rose 16.2% YoY to USD140.1m to form 64% of our FY14E forecast and 66% of the market’s. Its Alaskan unit or Unit 7 was off-hire and will be redeployed to a new client in Mar 15. Three more started working in 3Q14 but revenue for one has yet to be booked due to disputes on its start date with client. Net contributions thus came from only one unit. Ezion expects to receive compensation in 4Q14 for this disputed unit.
Top sector pick
Results do not alter our positive view on Ezion. We believe that it would continue to penetrate regional liftboat markets. It guided that six additional service rigs will be deployed in 4Q14, two towards end-December. However, its Chinese unit or Unit 13 would have to be recalled for rework in the yard. Offshore logistics work in Australia could slow in 4Q14 due to a time lag between projects. Ezion wants to take the opportunity to transfer these contracts to Ausgroup. It would retain the assets and bareboat-charter them to the latter. In addition, we expect a one-time gain of more than USD30m from the sale of its marine supply base to Ausgroup.
After adjusting for the above, FY14E core net profit is lower by 12%. But overall net profit is up 1.2%, after including the USD30m gain. We adjust our FY15E/16E core EPS by -1%/2%. Reiterate BUY, with TP trimmed to SGD2.35 from SGD2.38, still pegged to 11x FY15E P/E. This is 1SD above its 5-year mean.
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