UOBKayhian on 17 Feb 2015
FY15F PE (x): 5.9
FY16F PE (x): 5.1
Marginally ahead of expectation. Ezion reported net profit of US$223.7m for 2014 and
US$83.7m for 4Q14. Against our forecast of US$210m, results were marginally ahead
of our expectations. The company booked in a US$34.9m gain in 4Q14 from the
divestment of the offshore logistic support services business to AusGroup. This offset
the negative impact of the off-hire of Ezion’s tugs and barges in Australia. The tugs and
barges will be rechartered on a spot basis in 2015. Management had earlier guided
weaker-than- expected operating profits for 4Q14, but it would be offset by the
divestment disposal gain.
Cautious on new capex. In the company’s recent communication with institutional
investors, majority wanted Ezion to be cautious on having new capex amid the
beginning of an industry downturn. Ezion expects to secure charter contracts for less
new units than last year’s 10-11.
Maintain BUY and our target price of S$1.55, based on 7.0x 2016F PE. UOB Kay Hian
is forecasting an average Brent oil price of US$65/bbl for 2015 and US$70/bbl in the
longer term. Our regression analysis of past cycles suggests US$70/bbl for Brent oil,
and the 1-year forward PE of Singapore OSV-owner segment is 6.2x. Given Ezion’s
locked-in long-term vessel charters and its positioning in shallow-water production, we
value it at a higher 2016F PE of 7.0x.
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