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Time Is Ripe For A Turnaround For Ezra
Tradeable, Tradeable Ideas | 17 April 2014
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By: Raymond Leung
Articles (142) Profile
  1. Ezra announced a relatively disappointing 1H14 financial report card. The results failed to meet consensus estimates.
  2. However, business segments like the Subsea Services and Marine Services divisions continued to show good growth and increased their contributions to Ezra’s bottomline.
  3. Demand in the subsea and offshore sectors remain robust and this could ultimately underpin Ezra’s share price.

Last Friday, Ezra Holdings (Ezra) released disappointing 1H14 results as the firm’s earnings failed to meet consensus estimates. Profits for Ezra fell by 25 percent to US$ 30.9 million in 1H14 from US$ 40.9 million in 1H13. This was largely due to a one-time gains in 1H13. The one-time gains accounted for about US$33.8 million.

Despite the lower profits, revenue for the firm grew by 22 percent in 1H14 due to an increase in revenues from its Subsea Services division and Marine Services division. Ezra made a profit of US$ 16.6 million from the disposal of vessel.

After removing the one-time gain from the sale, the adjusted profits of Ezra rose by 101 percent.

This can show that Ezra’s fortunes are improving as profits from its businesses increased to US$ 14.3 million from US$ 7.1 million.

Profits from Ezra’s Subsea division improved significantly as utilizations grew in 1H14. However, the Offshore Support Services (OSS) division unexpectedly became the drag of the company.

This was due to an unplanned maintenance which resulted in higher than expected expenses for the division. A total of nine vessels were docked due to this maintenance which resulted in a lower utilization of 85 percent compared to 90 percent in 1H13.

Barring any unforeseen circumstances, we expect that Ezra’s 2H14 will improve as the outlook for the Subsea and the OSS sectors remain robust. Order book of the firm remains strong as it exceeds US$ 2 billion with more than US$ 800 million secured since the start of FY14.

Analysts from DBS Vickers Research gave Ezra a potential upside of 11.42 percent. On a side note, a potential gain may occur from the Subsea division as Ezra announced that it may spinoff the division for a separate listing earlier this year.

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

Ezra Hldgs  -- -- --   
Business: Co is a provider of integrated offshore solutions to the oil & gas industry. [FY16 Turnover] Marine Services (68.9%), offshore support and production services (25.7%), subsea services (5.4%).

Insight: Oct-17, The US Bankruptcy Court approved the appli... Read More

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