Ezion Holdings reported a 14.3% YoY decline in revenue to US$72.6m and a net loss of US$66.6m in 4Q16 vs net loss of US$63.5m in 4Q15, dragged by impairment losses and provisions of US$70.9m, offset by US$20m of forex gains. For the full year, the group saw a net loss of US$33.6m; we estimate core net profit to be about US$19m, below our expectations.

Meanwhile, the group will be reducing its originally planned capex by about US$270m with the indefinite postponement of four units of service rigs that were previously announced on 15 Apr 2014, 15 Jul 2014 and 15 Sep 2014. This would reduce the cash outflows required to take delivery of the units and the additional bank loans needed.

Pending more details in an analyst briefing later, we put our buy rating and fair value estimate of S$0.54 under review.

Source: OCBC Research - 23 Feb 2017