Ezion

Ezion: Reported 4Q11 results, which slightly missed expectations, although FY11 rev was in-line. Rev at US$27.3, -22.9% yoy and 14.2% qoq, while net profit at $10.5m, -23.7% yoy and -18.6% qoq. Result brings FY11 rev to US$107m, -8.7% yoy and net profit to US$58.1m, +44.6% qoq. Gross margins for 4Q however improved at 48% vs 32.9% yoy.

Slightly weaker 4Q rev was due to the corresponding quarter as the contribution from the nonrecurring and non-chartering income was lower, while one of Grp's Liftboat underwent a modification work before she went for a 3 yrs charter in Java Sea in Dec11.

Going forward, Group will continue to pursue business opportunities to support LNG related projects in Australia and its vicinities and continue to focus on the investment in Service Rigs to strong demand from its customers. Barring any unforeseen circumstances, mgt expects to perform better in FY12 vs FY11.

We note that overall, grp’s balance sheet remains strong with a net gearing of 35.2x, while at current price, grp trades at 9.7x P/E. Grp has declared a div of 0.1c/share. Overall, market still tips stock as one the top picks in the small-mid cap sector and given grp’s strong orderwins and capex plans, mgt has repeatedly stressed a potential cash call to raise capital.

Seperately, grp’s order momentum continues with the announcement that it has secured a charter contract with a value of up to US$118m over a 3yr period to provide a service rig to be used by a European based MNC to support its O&G activities in offshore Myanmar. The contract is not expected to have a material impact on NTA or EPS for FY12.