30 April 2013

Ezion Holdings - Can It still Continue Its Uptrend?

Ezion has retreated from its record high of S$2.20 and is now at around S$2.00. Nonetheless, it has started the uptrend since October 2011 and the shares price was up 400% since then. It clinched a lot of projects since year 2011 to support its momentum. To recap, Ezion Holdings is a company specializes in Multi-Purpose Self Propelled Jack-up Rigs (“Liftboats”). 

Source: Maybank Kim Eng Chart
Let us look at the list of the projects the company got recently:

  • 18 Apr 2013 - 50% JV - USD 148.6 million to provide a Service Rig over a 7 year period to support the oil & gas activities of a national oil major in Central America. Expected to start in 3Q2013 
  • 20 Mar 2013 - USD 48.2 million  over a 3 year period to provide a Service Rig to be used by an international oil company to support its oil & gas activities in the Arabian Gulf. Expected to start before End of 2013
  • 28 Feb 2013 - Received Letter Of Intent (LOI) - USD 45.3 million over a 2 year period to provide a Liftboat to be used by a South East Asian based national oil company to support its oil & gas activities. Expected to start by 3Q2013
  • 18 Feb 2013 - USD 79.9 million over a 3 year period with additional 2 year extendable option to provide a Jack-up Rig to support   a South Asian based national oil company. Expected to start by the 4Q2013
  • 15 Jan 2013 - Received Letter Of Intent (LOI) - Charter of one unit of Liftboat over a 4 year period with an approximate contract value of up to US$ 116.8 million. The Charter is expected to commence in 1Q2015 

While the company requires larger capital to deploy the upcoming projects, fund raising activities has taken in place since last 2 years, and we can see a gradual EPS increase compared to Total Revenue and Earnings Increase for the past few years. Fully Diluted EPS 9.12 cts for FY2012 was about 25% higher than 7.32 cts for FY2011.

Fully Diluted EPS 9.12 cts for FY2012 Compared to 7.32 cts for FY2011

Few things to note:

  1. Any future fund raising could only dilute the Earning Per Share (EPS) further. Given current low interest rate environment, I believe the company can utilize debts to fund its ongoing projects. Nonetheless I believe current management can manage the corporate finance well barring any unforeseen circumstance. 
  2. In my opinion, I think that the company could get more projects from different region, as long as Crude Oil price remains at US$90 and above. 

Summary of Ezion Holdings that I copied from Company announcement:

Ezion Holdings Limited (“Ezion” and together with its subsidiaries the “Group”) has 2 main   business divisions that specialises in the development, ownership and chartering of strategic   offshore assets and the provision of offshore marine logistics and support services to the offshore   oil and gas industries.          

The Group is the owner of one of the largest and most sophisticated class of Multi-Purpose Self Propelled Jack-up Rigs (“Liftboats”) in the world and one of the first to promote the usage of  Liftboats in Asia & Middle East. Ezion’s Liftboats  are used mainly for well-servicing,   commissioning, maintenance and decommissioning of offshore platforms.        

The Group is also the owner of a fleet of vessels, consisting of tugs, ballastable barges, offshore support vessel and self-propelled barge that are used in the provision of offshore marine logistics   and support services to the offshore oil and gas industries. The Group’s fleet of ballastable   barges, one of the largest in the region, has been specially reinforced and modified to carry the   prefabricated modules in the construction of LNG extraction facilities and jackets for the   offshore oil and gas industries.        

The Group’s operating companies also offers a range of services to include marine consulting   related to the development & construction and marine logistic solutions for marine offshore   facilities. Branch offices in Korea, The United States of America and Australia provide logistics,   supercargo, engineering and freight forwarding to complement existing operations.

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