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23-11-2010, 11:10 PM
Well Ichiran I am no expert on either Ezion or Ezra, though I did own some Ezra previously but divested it in late 2009.
Ezra bought into Ezion (previously known as Nylect) some time back, and that was when it was still floundering as a tech company and not making any profits. The aim at the time was to use Ezion as a company providing "support vessel services" to Ezra, and they could cross-sell services to each other. I believe Ezion now has its own order book and business which I am not totally familiar with, thus I am not in a position to comment on the prospects of the Company.
Do note that what dydx says has merit, for financial engineering cum leverage is what can cause the Profit and Loss to look so sparklingly good in the short-term. However, if you examine Ezra's Balance Sheet and Cash Flow Statement, it's a little like a slow-motion train wreck. I did a post on this not so long ago when Ezra released their FY 2010 results (their year-end is August 31, 2010). Assuming Ezion and their associate EOC are structured (financially) the same way, then you have the big question of whether the Companies can sustain their cash flows and operations in the mediun term without asking for more funds, and without going back to the capital markets again.
I've learnt (the hard way) to avoid companies which need heavy capex to grow, and the O&G sector seems to be a ripe one for that. So companies such as Ezra, Ezion and probably Falcon Energy are in this league, where they need to employ massive amounts of capital just to generate returns, and with heavy leverage.
Ezra bought into Ezion (previously known as Nylect) some time back, and that was when it was still floundering as a tech company and not making any profits. The aim at the time was to use Ezion as a company providing "support vessel services" to Ezra, and they could cross-sell services to each other. I believe Ezion now has its own order book and business which I am not totally familiar with, thus I am not in a position to comment on the prospects of the Company.
Do note that what dydx says has merit, for financial engineering cum leverage is what can cause the Profit and Loss to look so sparklingly good in the short-term. However, if you examine Ezra's Balance Sheet and Cash Flow Statement, it's a little like a slow-motion train wreck. I did a post on this not so long ago when Ezra released their FY 2010 results (their year-end is August 31, 2010). Assuming Ezion and their associate EOC are structured (financially) the same way, then you have the big question of whether the Companies can sustain their cash flows and operations in the mediun term without asking for more funds, and without going back to the capital markets again.
I've learnt (the hard way) to avoid companies which need heavy capex to grow, and the O&G sector seems to be a ripe one for that. So companies such as Ezra, Ezion and probably Falcon Energy are in this league, where they need to employ massive amounts of capital just to generate returns, and with heavy leverage.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/