Ezion Holdings issued a profit guidance for its 1Q17 results, saying that the depreciation of USD in the quarter has given rise to a material foreign exchange loss on its unsecured financial liabilities denominated in SGD, and hence 1Q17 will show a net loss.

We had expected 1Q17 to be a relatively weak quarter as some operational issues in 4Q16 were likely to persist into 1Q17. However, the net loss position is still a surprise, and we will be waiting to see the quantum of the net loss.

Meanwhile, stock performance could be lacklustre with few positive catalysts, although valuations remain low (~0.4x book). As the group’s 1Q17 results will be released on 12 May 2017, we put our Buy rating and fair value estimate of S$0.54 under review for now.

Source: OCBC Research - 9 May 2017