Ezra Holdings reported its 2QFY14 results this morning, with revenue growing 21.6% YoY to US$300.4m, while PATMI declined 34.0% to US$19.6m. However, we note that its 2QFY13 PATMI of US$29.7m was boosted by a US$30.0m disposal gain on fixed assets (sale-and-leaseback of vessels). For 1HFY14, revenue rose 21.8% to US$640.3m but PATMI dipped 28.8% to US$25.9m. This formed 48% and 59% of our FY14 forecasts, respectively.

Ezra’s Subsea Services division was its main revenue driver for 2QFY14, with a US$59.3m YoY increase, driven by an increase in value and number of projects undertaken and additional variation orders. Revenue from its Marine Services Division was flat, while its Offshore Support Services Division saw a US$6.2m YoY decrease in revenue for 2QFY14. Ezra’s order book remains above US$2.0b, and it is cautiously optimistic that its 2HFY14 performance will better than 1HFY14. We will provide more details after the analyst briefing. For now, our Sell rating and S$1.03 fair value estimate on Ezra is UNDER REVIEW.

Source: OCBC Research - 11 Apr 2014