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Ignore The Doomsayers, Ezion is Still A Good Buy!
Tradeable, Tradeable Ideas | 07 August 2014
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By: Raymond Leung
Articles (142) Profile
  1. Ezion announced a 37.8 percent and 33 percent increase in revenue and net profit respectively.
  2. Ezion has won 7 contracts so far this year. Cash flows are expected to be fairly stable with contracts that stretch till 2022.
  3. The reverse takeover of JK Tech will potentially transform Ezion into an integrated upstream oil and gas company.

Analysts' updates on Ezion Holdings

Last week, Ezion reported that its 2Q14 revenue was up by 37.8 percent to US$92.6 million from US$67.2 million a year ago. Net profit for the quarter grew by 33 percent from US$35.2 million to US$46.8 million.

This brought 1H14 net profit to US$ 93.1 million which is 15 percent higher than the US$80.1 million in 1H13.

Ezion has so far won 7 contracts this year. This is expected to lead to the increase of its fleet to 36 vessels. This is because some of these contracts require Ezion to order new vessels to cater to specific requirements.

Sentiments from the street expect Ezion to continue with its strong performance for the rest of the year. Strong contributions can be expected from the delivery of six vessels in the latter half of this year.

At the same time, profits for the group is expected to double in the next 24 months as 19 of its vessels are due for delivery. These 19 vessels have not contributed to the cash flow of the current quarter.

The company’s cash flows are expected to be fairly stable at it has secured contracts that will stretch till 2022. Most of the vessels have contracts that last for a period of five to seven years and only six of its 36 vessels are expected to have their contracts end by 2015.

With Ezion’s strong reputation in the robust offshore oil and gas industry, I believe that the six vessels will eventually be marketed out in a matter of time. On a side note, the reverse takeover of JK Tech will potentially transform Ezion into an integrated upstream oil and gas company.

With the stellar performance, Ezion declared a five for one bonus issue. This will return significant value to shareholders and increase market float. Analysts from MacQuarie Research hold a long term bullish view towards Ezion and gave it a target price of $3.00.

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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.

Ezion Hldgs  -- -- --   
Business: Co develops, owns, and charters offshore assets to support the offshore energy markets. [FY17 Turnover] Liftboats (49.7%), Jack-up Rigs (39.5%), Offshore Support Logistic Services (10.8%).

Insight: Aug-18, 1H18, Co returned to the black with a net ... Read More

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