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30-07-2015, 09:33 AM
Let willing and confident buyers of the bonds bail out the bank...
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Ezion Holdings
Ezion Holdings
Ezion Holdings
30-07-2015, 11:32 PM
http://infopub.sgx.com/FileOpen/Ezion_Pr...eID=362286
http://infopub.sgx.com/FileOpen/Form%201...eID=362518 http://infopub.sgx.com/Apps?A=COW_CorpAn...uddies.com Raised $120m of "low costs" funding then do share buyback... very the can... Of course insider also gave confidence via open mkt purchase... Not Vested Kay Poh Buddy (30-07-2015, 09:33 AM)greengiraffe Wrote: Let willing and confident buyers of the bonds bail out the bank...
14-08-2015, 12:53 PM
End game in progress... demise of another darling
UOB KH: Ezion Holdings (EZI SP) BUY Price/Tgt: S$0.765 / S$1.52 Mkt Cap: US$863.9m 52-wk avg daily value: US$12.7m 1-Yr Hi/Lo: S$1.92/S$0.735 Results Flash: Net profit of US$29m, down 36% Analysts: Nancy Wei / Foo Zhiwei Tel: (65) 6590 6628/6626 What’s New? - Ezion reported net profit of US$29m, down 36% yoy. 1H15 was US$70m, down 23% yoy - Revenue was down marginally at US$90m, down 2.8% from US$93m in 2Q14. - Gross profit was down 34% on higher costs, at US$31m versus US$47m in 2Q14 - Gross margin was 35% for 2Q15, down 16ppt from 51% in 2Q14. Our Take - Net profit came in below expectations; 1H15 results of US$70m was 32% of our full-year forecast of US$218m. - We reckon the below-expectation results were due to a) the absence of revenue contribution from the tug and barge fleet in Australia (Ezion's aim is to divest this fleet), b) timing difference in revenue recognition in the liftboat/service rig business and c) higher refurbishment costs. - The large drop in gross margin was mainly due to a 30% increase in costs. One of the factors contributing to the sharp increase in cost of sales was the US$8.8m increase in depreciation charge from US$24m to US$33m as new units were deployed in 2Q15. Valuation/ Recommendation - Our current recommendation is a BUY, with target price of S$1.52. - More details pending an analyst briefing later in the morning. Look out for our results note on Monday.
14-08-2015, 12:59 PM
I notice in many analysts reports for the offshore&gas industry, the analysis of cash flow is ignored. However, for analysis involving some companies like Super Group, cashflow analysis is touched on. It is quite funny that they will overlook the cash generation ability of og companies when cash is the lifeblood of a company and not entirely on its p&l
14-08-2015, 04:42 PM
Company Share Price Rec Target Px Within Expectation Profit yoy Profit qoq Highlight of Results
Ezion Holdings S$0.74 BUY S$1.52 Below -36.3% -29.4% See attached comments. Ezion Holdings reported net profit of US$29.0m for 2Q15, and US$70.0m for 1H15. Results was below expectations, at 32% of our FY15 forecast of US$218m. It was also below consensus mean FY15 estimate of US$203m. Analyst briefing takeaways: Revenue was marginally lower at US$90.1m, down 2.8% from US$92.6m yoy. Cost of goods spiked 29.6% from US$45.3m to US$58.7m. Gross margin for 2Q15 fell from 51% to 35% yoy as a result. The lower earnings was mainly attributable to operational issues which resulted in the spike in costs. The issues are as follows: 1. 7 units undergoing switching over 2Q15-3Q15. 7 out of the 25 service rigs are involved in this inter-changing. This will create gaps in revenue during the period. Switching is necessary for better deployment of service rigs in the long-term as it allocates the appropriate service rig that meets the clients' requirement. This reduces the capex Ezion will incur compared to if it had upgraded the existing units based on clients' request. 2. 2. Loss on Teras Sunrise. Ezion made its first liftboat charter in Australia, chartering the its largest and most advanced liftboat, Teras Sunrise, to an oil major. This is the first liftboat in Australia. Due to union laws in Australia, Ezion was forced to take on Australian crew, whose costs are triple that of International crew. This was in spite of the charter contract allowing for the employment of international crew. Crew costs ballooned as a result. Additionally, the Australians were relatively new to liftboats, and that caused operational setbacks. Ezion is looking to pull back the unit and resolve the situation with the customer before proceeding forward. The costs incurred from this exercise resulted in a loss for the unit. Teras Sunrise is currently estimated to return to work by 4Q15. 3. 3. 75% fleet utilization in 2Q15. Fleet utilization was 75% in 2Q15. Ezion had 6 units that were not operational due to repair, upgrades and drydock inspection. The 6 units exclude Teras Sunrise. 4. 4. Low activities from Australian tug & barge fleet. The Australian unit experienced lower activities in 2Q15 vs its peak in 2Q14. Ezion intends to sell the fleet and is looking for spot jobs in the interim period. 5. 5. Higher expense owing to 3 new units delivered in 2Q15. Ezion took delivery of 3 more units in 2Q15, increasing its fleet from 22 to 25 units from 1Q15 to 2Q15 respectively. The increased depreciation, crew and operationally-related expenses contributed to the higher cost of goods for 2Q15. Administrative expense rose 12.9% from US$4.3m to US$4.8m as Ezion took on a few more senior headcounts. It is expected to stabilise at this level going forward. Finance costs was 28.2% higher, from US$5.4m to US$7.0m on additional interest expense from funding of newly delivered service rigs. Share of associates saw a 16.4% increase from US$7.9m to US$9.3m, due to a better than expected results from one of its associates with POSH. Regards, Zhiwei Foo UOB Kay Hian (Singapore) Pte Ltd 8 Anthony Road, Singapore 229957 Tel: +65 6535 6868 Dir: +65 6590 6626 E-mail: zhiwei@uobkayhian.com
17-08-2015, 12:31 PM
Macquarie:
Not ‘doomsday’ as is being priced in Event Ezion reported S$29m in 2Q15 (vs S$41m in 1Q15), missing our estimates by 30%. The miss was due to the highest costs on new deliveries while they didn’t contribute to revenues. Valuation at 0.6x P/B is pricing in a ‘doomsday’ scenario in our view while its core business is very firm in a turbulent environment. All of its 37 vessels are contracted with none being cancelled despite weak oil environment. Impact Results’ highlights: Revenues flat QoQ but costs increase = profit decline QoQ: Ezion delivered 3 new vessels in 2Q15 thus increasing its COGS by 36% QoQ, depreciation by 11% QoQ and interest cost by 21% QoQ. Why were revenues flat despite 3 new deliveries?: Firstly, 2 out of the 3 vessels were delivered only in May ’15, thus adding only one month of revenues. Secondly, Ezion had 7 units which were switched around from one geography to another – thus resulting in idle time and zero revenues. Vessel status – 22 delivered, 15 to go: Out of these 15, 6 will be delivered from Sep-Dec ’15 according to mgt, while the rest 9 will be delivered in 2016. Re-contracting status – 4 out of 5 done: Out of the 5 vessels expiring this year, 4 have already been re-negotiated and re-contracted. Only 1 is due which is in the North Sea, for which negotiations are on, according to mgt. Looking forward: Quite remarkable to maintain QoQ revenues despite the movements: We think Ezion has done extremely well to maintain revenues QoQ. Switching around of vessels and upgrade jobs at own costs are realities in an oil downcycle environment in our view, with which Ezion has dealt very well. 2H15 revenues to improve sequentially with recent and more deliveries: The 3 recent new deliveries will add ~S$10m/qtr to revenues from 3Q15 according to our analysis. In addition, 6 other vessels will be delivered sequentially in 2H15 which could add another S$10-15m per quarter. 1H15 profit at S$70m, 2H15 should be higher: While our and the street’s 2015 profit estimates have downside risk now, we believe 2H15 profits will be sequentially higher as the recent 3 new vessels and 6 others contribute. Biggest positive – NO cancellations: All 37 vessels are still contracted which implies a steady stream of revenues for the foreseeable future. Earnings and target price revision Our estimates are under review. Price catalyst 12-month price target: S$1.50 based on a DCF methodology. Catalyst: News on re-contracting of vessels Action and recommendation Even with 30% downside to our estimates, stock is extremely cheap: Even with 15E profit of S$150-160m, it trades at 5x P/E, and only 0.6x P/B now. KE: Liftboat Demand Intact 2Q15 missed on lower gross margins, with additional costs from several operational issues. Cut EPS by 17-38% for costs, deployment delays & allowances for off-hires. No contract cancellations. Four of five expiring contracts renewed. Maintain BUY with TP lowered from SGD1.55 to SGD1.35, now at 1.0x FY16 P/BV from 1.2x. Expect catalysts from 4Q15/1Q16 sequential earnings jump. What’s New 2Q15 PATMI of USD29.0m (-36.3% YoY, -29.4% QoQ) missed expectations. 1H15 PATMI of USD70.0m (-22.9% YoY) formed 30/34% of our/consensus FY15F. 2Q15 gross margins retreated 11.2ppts QoQ to 34.9%, under: 1) higher crew costs for Unit 24 (Sunrise) in Australia due to union issues, which Ezion is trying to resolve; 2) the idling of six units in 2Q15 for repair, upgrades and dry-docking; and 3) a higher proportion of lower-margin time-charter contracts. Nineteen liftboats contributed in 2Q15, up from 17 in 1Q15. What’s Our View Ezion will inter-switch seven of its liftboats in 2Q-3Q15 for more efficient deployment and to meet clients’ demands. This will create contribution gaps, but reduce overall capex and costs that it may otherwise have to incur. Importantly, there have not been any contract cancellations. In fact, four of five expiring contracts have been renewed. Operational vessels are 99% utilised, a testament to its relative resilience. We cut FY15-17 EPS by 20-34% for additional costs, deployment delays and off-hires in FY16-17, to be conservative. Net gearing could rise to 1.1x by year-end but it has been able to access funding with a recent SGD120m bond issue at only 3.65%. Despite our lowered numbers, we forecast that FCF yields could still approach 12% in FY16. 4Q15/1Q16 sequential earnings jump possible with eventual deployment of idling units. Maintain BUY, TP lowered from SGD1.55 to SGD1.35. This is now at 1.0x FY16 P/BV instead of 1.2x, due to increased bearish sentiment on the sector. CIMB: Getting its house in order Ezion has built up rapidly over the past 2-3 years, amassing an asset base of over US$2bn. However, this came the cost of its foundations, which may not be deep enough. We believe that 2Q and FY15 results reflect Ezion getting its house in order. At 36% of our FY15 forecast, Ezion’s 1H15 core net profit of US$70m (-23% yoy) was below our expectations and consensus. 2Q15 was marred by cost overruns and rejigging of its fleet, and we expect the effects to ripple through 3Q. We shave FY15-17 EPS by 10-29% as we factor in the earnings miss, tweak our fleet deployment assumptions and temper Australian contributions. We also lower our margin assumptions as Ezion shifts to operatorship (inherent executional issues). Maintain Add, with a lower target price, based on a justified 1.2x CY15 P/BV (instead of a blended valuation). Catalysts could come from stronger earnings and contract wins. 2Q15 marred by cost overruns and rejigging of fleet The qoq drop in Ezion’s gross margin from 46.1% in 1Q to 34.9% in 2Q was mainly due to cost overruns from liftboat Sunrise (deployed in Australia). Unhinged by crewing, and then mechanical-related issues, we estimate that Sunrise incurred US$3m-5m losses in 2Q (due to repair provisions). The unit will be towed back to Batam, Indonesia for repairs in the coming week. It has contributed 1.5 months of revenue in 3Q and the unit could break even in the quarter if there are no further major repair expenses. The negative deviation also sprang from the interchanging of seven service rigs, which will continue throughout 3Q. This strategic manoeuvre is intended to improve deployment of assets in the longer term. The rejigging of fleet can be inferred from flat qoq revenue, which offset the deployment of three additional rigs (refer overleaf for fleet status). Margins were squeezed by the operating burden carried by the rigs, which were switched around (no revenue to offset depreciation charges,) as well as the associated costs of mobilisation and maintenance. Expect flat 3Q… but jump in FY16 when downtime rigs go online If there are no further major repair expenses for Sunrise and no contract cancellations, we expect c.4% qoq improvement in net profit for 3Q (US$30m). The improvement would come from full-quarter contributions from service rig #29 (50% JV with Swissco in the Middle East), liftboat #19 (deployed in Brunei) and a small contribution from one service rig added in 3Q. As yet, no additional rigs have been delivered in 3Q. However, these would be offset by the full-quarter’s downtime for rig #12 (deployed in Myanmar), possible maintenance for liftboat #3 (deployed in the Middle East) and continued effects of rejigging the fleet, which we believe will be more substantial vs. 2Q.
17-08-2015, 03:44 PM
All Buys but price still drop... All the consultants salah?
No Vested Interests DBS: Could have been better 2Q15 results below on unexpected vessel downtime and higher cost incurred for the Australian unit Trim FY15/16F earnings by 31/17% Look forward to better 2H on resumption of units currently under repair and upgrades, and new deliveries Reiterate BUY; TP lowered to S$1.00 Hit by unexpected loss of income and cost. 2Q15 results disappointed, falling 36% y-o-y and 29% q-o-q to US$29m. This brings 1H15 PATMI to US$70m, making up only 34% of consensus estimate. 2Q15 would have seen sequential improvement on the back of three rig deliveries in the quarter. However, performance was dragged down by loss of income for a large vessel taken off the fleet for repairs. This unit was contributing c.US$10m a quarter and this had offset the additional income stream from new deliveries. In addition, there were higher-than-expected expenses incurred from employing Australian crew for the newly commenced Australian timecharter unit. The unit was initially planned to be operated by an international crew which would have incurred lower costs. Making things worse, the vessel suffered mechanical damage in its first month of operation. There were provisions made in 2Q, resulting in c. US$5m increase in COGS. Coupled with higher depreciation (+US$3m), gross margins fell by 11ppts q-o-q to 35%. Better 2H. We have cut our FY15/16F earnings by 31/17% to account for the abovementioned unexpected events, and adjustment to delivery schedule. We expect some recovery in 3Q15 with full quarter contribution from the new deliveries in 2Q15, and a stronger 4Q15 with the resumption of six vessels that are currently off-hire for repairs and upgrades. Potential upside could come from successful cost pass-through and claims for repair cost of the Australian unit. There have been no cancellations or rate reductions made thus far. Nevertheless, customers are demanding for service rigs with higher performance and specs to save on costs. As such, Ezion plans to switch 7 service rigs in 2H to minimise capex requirements for vessel upgrades. Reiterate BUY; TP revised to S$1.00. Ezion remains one of the more resilient O&G players. Our TP is lowered to S$1.00, still pegged at 8x FY15F PE, following the earnings revisions. We believe Ezion should re-rate closer to our TP as it delivers on earnings in the coming quarters. Key downside risks would be the further plunge in oil prices, which would dampen O&G activities and sentiment. UOB KH: Ezion Holdings (EZI SP) 2Q15: First-mover Disadvantage In Australia Results were below expectations on: a) a loss on Teras Sunrise liftboat in Australia, b) downtime resulting from unit switching, and c) selected delays. Six out of 25 units did not contribute to 2Q15 earnings. However, contracts remain intact and we expect earnings to recover in 4Q15. We cut our 2015-17 net profit forecasts by 31%, 15% and 11% respectively. Maintain BUY. Target price: S$1.40. 2Q15 RESULTS Year to 31 Dec (US$m) 2Q15 yoy % chg 1H15 yoy % chg 2Q15 Remarks Turnover 90.1 (2.8) 180.2 (3.7) 6 units did not contribute to revenue Gross Profit 31.4 (33.7) 72.9 (23.0) Higher cost of sales arising from deployment/delivery of new service rigs. See report comments. EBIT 25.9 (38.4) 63.7 (25.1) Higher G&A, finance costs PBT 29.3 (36.5) 70.6 (23.1) Tax (0.4) (52.4) (0.7) (45.8) Net Profit 29.0 (36.3) 70.0 (22.9) Would have been flat if not for operational setbacks Gross Margin (%) 34.9 (16ppt) 40.5 (10ppt) Lower due to higher depreciation from delivery of new units, loss on Teras Sunrise, Source: Ezions, UOB Kay Hian RESULTS First-mover disadvantage in Australia. Ezion reported a net profit of US$29m for 2Q15, down 36.3% yoy. 1H15 net profit was US$70.0m, representing 32% of our 2015 forecast of US$218m. Gross margin fell from 51% in 2Q14 to 35% in 2Q15. 2Q15 soft earnings were due to some unanticipated operational issues: a) Teras Sunrise - which was expected to go on a short job in Malaysia - ended up in Australia. It suffered a loss due to higher-than expected crew cost and provision for repair of equipment damage; and b) Ezion also interchanged among customers some of its service rigs. This was to better meet new customer requests for upgrades while mitigating potential capex that could arise from meeting the requests; c) unexpected issues that dragged from 1Q15 into 2Q15 resulted in several units not contributing to revenue in 2Q15. We elaborate in details on these operational issues below. Key takeaways from analyst briefing 7 units undergoing switching over 2Q15-3Q15. Seven of the 25 service rigs are involved in this inter-changing. This will create gaps in revenue during the period. Switching is necessary for better deployment of service rigs in the long term as Ezion allocates the appropriate service rig that meets clients' requirement. This reduces the capex Ezion would have incurred if it had upgraded the existing units based on clients' request. Nomura: Bad 2Q15 earnings, good ops cash inflows Global Markets Research Market should distinguish between disappointing results and distress business valuation Action: Accumulate Ezion – trades at distressed valuations, in our view Rating Remains Buy Target price Reduced from 1.80 SGD 1.55 Closing price 14 August 2015 SGD 0.72 Potential upside +113.8% Anchor themes We expect Ezion's service rigs to benefit from the substitution demand in Southeast Asia and the Middle East for more efficient, cheaper and safer repair and maintenance work on fixed production platforms, in the production phases of shallow water oil & gas fields. Nomura vs consensus Our FY15/16F core net profits are 10% below/8% above consensus estimates. Research analysts Singapore Capital Goods Wee Lee Chong - NSL weelee.chong@nomura.com +65 6433 6960 Abhishek Nigam - NSL abhishek.nigam@nomura.com +65 6433 6969 We retain our Buy on Ezion, but cut our TP by 14% to SGD1.55. Despite resilient day rates for service rigs, Ezion has surely disappointed with core net profit down 23% y-y in 1H15, due to: 1) vessel delivery delays; 2) unfortunate service rig accidents and 3) demand collapse for tugs/barges in Australia. Still, we see the 62% share price dip from the peak of end-3Q14 as excessive. Ezion still generates healthy operating cash inflows, with USD149mn in 1H15, and it is on track to turn free cash flow positive in FY16F. Even if the market is to assume further delays to the guidance for a net addition of 10 units h-h in 2H15F (with secured contracts), vs its 19 operational service rigs at end-2Q15, the likely FY16F P/E is in the undemanding range of 3-5x (FY15/16F EPS: USD0.10/0.16) and 0.5-0.6x P/B (FY15/16F BVPS: USD0.9/1.0). 2Q15 results disappoint, due to unexpected Teras Sunrise surprise 1H15 net profit of USD70mn equals 37% of our previous FY15F estimate. This is due to a below-consensus 2Q15, as net profit (-36% y-y) was hit by one-off total ship repair costs that are northwards of USD4mn, including Teras Sunrise’s USD3-5mn cost to repair the parts damaged during operation. This unit is the highest spec service rig in Ezion’s fleet, with offshore installation capabilities. Deployed in Australia in mid-2Q15, it also suffered unexpected operational losses due to the unscheduled use of unionised and highly paid Australian workers. Ezion is now negotiating for potentially higher day rates. FY15-17F net profit cut on higher costs, continued loss at Teras Sunrise We cut FY15/16/17F net profits by 14%/11%/7%, to reflect: 1) The assumption of recurring losses for Teras Sunrise from 2Q15F, until Ezion has officially resolved the higher-than-contracted operating cost issues. Management is cautiously optimistic about a successful resolution of this contract with the oil major. 2) The charging of vessel repair costs that are expensed off, vs the capitalising of ongoing upgrading costs. 3) The delay of two newbuild deliveries into 2016F, vs the latest guidance of six units returning from dry dockings plus six new deliveries in 2H15F. 4) The removal of two operational units for dry docking in later 2015F or early-2016F. OCBC also maintain BUY: Can't cut and paste (17-08-2015, 12:31 PM)greengiraffe Wrote: Macquarie:
17-08-2015, 05:41 PM
Back in May 2014, Hong Leong Malaysia/Quek Leng Chan purchased 100m shares at $1.94...paper loss of $128m in slightly over a year...ouch...
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