Towards Financial Freedom
Ezra - Subsea Loss-Making In 3QFY13
Ezra reported a core net loss of USD52m, although a USD59m one-off gain from Ezion shares sale boosted its headline net profit to USD7.2m. Following the poor results, we slash our FY14-15F core EPS estimates by 12%-24% on lower margins. The group's continued inability to deliver earnings, weak cash generation and industry-wide project delays could add further strain on its balance sheet. Downgrade to SELL, with our TP lowered to SGD0.70 (from SGD1.15 previously).
- USD52m core net loss below expectations. Excluding a USD59m gain from one-off items, 3QFY13 core net loss of USD52m was below our and consensus expectations. 3QFY13 revenue rose 19% y-o-y and 28%q-o-q to USD317m on higher subsea and marine revenue, but blended gross profit margin was disappointing at 0.7% (3QFY12: 16.7%).Significant one-off items were: i) a USD67.4m gain from Ezion sharessale, ii) a USD4.5m gain from derivative financial instruments, iii) aUSD7.2m loss from fixed assets sale, and iv) a USD5.2m net forex loss.
- Subsea loss-making; management change in offshore. 3QFY13 operating EBITDA came in at -USD24.3m, while 9MFY13 operating EBITDA was USD29.2m vs our pre-revision estimate of USD143m . The subsea division posted negative mid-teen margin in 3QFY13, while the offshore unit recorded a 17%-18% gross margin. Ezra reshuffled the top management team in its offshore division.
Source: OSK
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