Ezion Holdings' Q4 net profit almost doubles

OFFSHORE marine group Ezion Holdings posted a 97.3 per cent year-on-year rise in its Q4-FY13 net profit to US$40.5 million, led by higher charter income from its offshore-service rigs and logistics-support vessels from the group's Australian projects.

Group revenue for the three months increased 60 per cent year-on-year to US$83.7 million on additional units of the group's liftboat and jack-up rigs being deployed, as well as higher contributions from its offshore logistics units working on three LNG projects off Australia.

With the final quarter well ahead of market consensus estimates, the group's FY13 net profit jumped 103.4 per cent to US$160.4 million. This was despite higher interest expense and depreciation costs.

Group revenue increased by 77.7 per cent year-on-year to US$281.9 million for the year, while gross profit increased 88 per cent to US$133.2 million, with gross profit margins at 47 per cent, compared with 45 per cent previously.

Finance costs for the year increased 57.4 per cent to US$12.2 million, largely because of the issue of S$270 million in notes under a Multicurrency Debt Issuance programme and higher bank loans to fund new service rigs and vessels.

The group had total financial liabilities of US$1.09 billion as at Dec 31, including the notes issue.

Despite a 97 per cent rise in pre-tax profits to US$162.9 million, Ezion's tax bill decreased 32.8 per cent to US$2.6 million, helped by the tax exemption on charter income derived from Singapore flagged vessels under Section 13A of the Income Tax Act of Singapore.

Management said the group has seen "an increased focus on platform- and well-related work by the oil majors in the Asia-Pacific, the Middle East and West Africa".

As a result, the group expects to continue to invest in service rigs to meet the strong demand and to explore new ways to restructure its port and marine based business to allow the group to concentrate on its current key businesses.

The group announced on Feb 12 that it had terminated its bid to acquire a 45.15 per cent stake in mainboard-listed Ocean Sky.

The failed bid involved a reverse takeover plan by Ezion, which wanted to inject its marine supply base business in Australia, Ezion Offshore Logistics Hub, into Ocean Sky. Ocean Sky has interests ranging from construction and civil engineering to property management.

In its statement last week, Ezion said the reverse takeover would have resulted in "protracted timings" and all sides had agreed to terminate discussions relating to the plan. It added that because of conditions pertaining to the share subscription not having been met, the deal had lapsed.

Analysts remained upbeat on the stock, with 14 out of 15 rating it a "buy", with an average 12-month price target at $2.95.

Consensus estimates for Ezion's FY14 net profit stand at US$228 million, and for FY15, US$282 million.

This means an average annual growth of 33 per cent on the back of a continued growth in its fleet of offshore service vessels. Based on the profit estimates, the price-earnings ratio for FY14 is at 9.7 times and for FY15, 7.9 times.

Ezion closed down one cent at $2.30 yesterday, with 5.4 million shares traded following the early-morning results announcement.