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What is Ezion's business??? Oil and Gas? or collecting listed companies???
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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Buy 7% Ausgroup somemore... even more garang than Ezra
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Think Asset-Business-Structure (ABS)
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Will the Ezion effect be on Ausgroup, notice whatever is linked to Ezion moves sky high. Stupid market exuberance in my view
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why is ezion trying to tie-up with so many listed firms? yhm (charisma), ocean sky (failed), jk tech and now ausgroup?
wouldnt it be a cheaper option to expand and collaborate privately?
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09-04-2014, 12:36 PM
(This post was last modified: 09-04-2014, 05:04 PM by greengiraffe.)
What Ezion is doing now is no different from what other ex darling stocks have done historically.
Raffles Edu is a classic example that went through the path of using its "track record" to create value with their midas touch.
I remember that Chew Hua Seng was such a colourful character during Raffles Edu heydays alongside with ex broker Gabriel Yap (always on TV talking up Raffles Edu and Midas).
Raffles Edu bought Chinese child care play Oriental Century only to be defrauded by Chinese when it turn out to be a dud.
Raffles Edu also bought out Easycall from Boustead for what was back then China's only approved foreign owned University Boustead Tianjing University.
Basically anything that Raffles Edu bought turn to gold instantly.
Is there any difference here? I don't really think so given that Ezion has yet to generate good cashflows from its portfolio of present business and has been constantly raising capital from various sources to finance new business initiatives.
Afterall since there are many supporters of Ezion initiatives, it will be a game of musical chairs....
GG
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I think this should be a red flag...
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Looks quite similar to the replay of Ezra (sale of KS Energy shares, securitisation of support vessels) during the darling days - underpinned by one-off sales in assets rather than relying on cash from operations which till today remains elusive. Note that cash hoard resulted from repeated issues of various sorts of capital raising...
PLAY OF THE WEEK
Concern over possible squeeze in Ezion's margins
Marine play fails to get lift despite deals with JK Tech Holdings and Ausgroup
Published on Apr 12, 2014
There is a possibility of Ezion injecting its service rig fleet into a business trust to address its high debt gearing concern, one analyst said. -- PHOTO: EZION HOLDINGS
By Goh Eng Yeow Senior Correspondent
THE moves by marine play Ezion Holdings to snap up stakes in Catalist-listed JK Tech Holdings and energy-related Ausgroup had some analysts salivating over its prospects again.
But while JK Tech almost tripled in price on Monday and Ausgroup gained about 23 per cent on Wednesday after their respective deals were announced, Ezion failed to get any lift at all. The counter ended the week 2.3 per cent down at $2.09.
Ezion had taken a 6.9 per cent stake, or 39.9 million shares at 35.5 cents apiece, in Ausgroup on April 3. It then signed another deal to buy a further 70 million new shares with an option for 145 million more - all at 36.75 cents apiece - to help finance Ausgroup's expansion in Australia.
Ezion has also agreed to subscribe for new shares issued by JK Tech, which said it intended to diversify into the oil and gas exploration business.
The two deals followed the firm's failure to acquire a 45.15 per cent piece of mainboard-listed Ocean Sky, would would have held Ezion's marine supply business in Australia.
DBS Vickers analyst Ho Pei Hwa is especially bullish on Ezion.
She noted that the collaboration between Ezion and Ausgroup would cover a host of areas in the logistic supply chain and related support services in Australia. But even then, she felt that the grand plan is still lacking in details.
Ms Ho also noted that Ezion's "lucrative margins" will attract new competitors into the business. The company operates a fleet of liftboats serving the offshore oil exploration industry.
She said: "Before the industry reaches saturation point, we reckon there will be opportunities for investors to unlock value as Ezion stands out as a good takeover candidate in view of its first mover advantage, market leadership and sizeable fleet."
There is also the possibility of the company injecting its service rig fleet into a business trust to address its high debt gearing concern, she added.
Still, Ezion's performance may depend on whether investors continue to believe in its liftboat story.
CIMB analyst Yeo Zhin Bin noted in February that any re-rating in Ezion will depend on the company clinching further contracts.
With Ezion sitting on a war-chest of US$150 million (S$189 million) from various capital-raising exercises since 2013, he believes the company would be able to fund another 10 liftboats or service rigs.
But he advises investors to take profit if they do not believe that the company can secure more contracts.
Another concern is a possible squeeze in Ezion's profit margins.
Mr Yeo said: "Following the record gross margins in 2013, management has downplayed margins expectations going forward.
"Management shared that as more and more service rigs on time-charter contracts get deployed, gross margins would naturally drop."
But he anticipated that more falls in margins would be very gradual. "Rather, we are more mindful of on-time vessel deliveries and capital bottle-necks," he added.
engyeow@sph.com.sg
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OPPORTUNITY TO UNLOCK VALUE
Before the industry reaches saturation point, we reckon there will be opportunities for investors to unlock value as Ezion stands out as a good takeover candidate in view of its first mover advantage, market leadership and sizeable fleet.
DBS Vickers analyst Ho Pei Hwa
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