• Obtains stake in Indonesian shipping co
• Marine transport of fuel
• Little impact on earnings estimates for now

Seeking to strengthen foothold in Indonesia

Ezion Holdings has obtained a 49% stake in PT Pelita Bara Samudera (PBS), an Indonesian shipping company that was previously whollyowned by Quvat Group, an Indonesian-focused PE firm that was founded in 2006. This was first reported in a Business Times article which also mentioned that the JV has taken delivery of an oil product tanker, the Mahakamah I. The vessel was renamed at a ceremony on 23 Aug 2016 at Rotating Offshore Solutions in Tuas; the 177m, 31.7k DWT tanker is Indonesian flagged and is on a long term charter with Pertamina to transport fuel from Singapore to Surabaya.

Recall Ezion announced on 21 Jun that its wholly-owned subsidiary, ES Indonesia Pte Ltd, had entered into a JV agreement to acquire a 49% interest in an Indonesian company that will own, charter and operate vessels. We understand from Ezion’s management that the JV only has one vessel now and there are plans to grow the fleet; we also note that Ezion’s relationship with Pertamina would be strengthened from this move, which may present more opportunities for the group in future.

PBS- exiting dry bulk business to enter tanker segment

Established in 2007, PBS was formerly in the dry bulk shipping business, and the CEO is Mr Lennardi Anggijono. According to a Nov 2015 article by Tradewinds, PBS had sold three bulkers for US$3.5m each to Chinese buyers, after revealing that contract rates on offer by Indonesian clients do not justify its continued presence in the dry sector. The vessels had been used by PBS to service a long-term contract of affreightment (COA) with power producer PT Jawa Power that ended in Oct 2015.

Little impact on earnings estimates

PBS only has a tanker currently and Ezion’s share of the estimated profit from this is not significant compared to Ezion’s current yearly net profit. As mentioned in our earlier report, 3Q16 is also likely to be a lacklustre one for the group. Maintain HOLD with S$0.30 fair value estimate.  

Source: OCBC Research - 15 Sept 2016