Ezra

Ezra: Announced 9M12 results which was relatively in-line. Rev at US$265.6m, +61% yoy and +25.3% qoq, while net profit at $22.4m, +248% yoy and flat qoq. Result brings 9M12 Rev to $657.9m, +94% yoy and net profit to $57.7m, +108% yoy. Stronger bottom-line helped by surge in Other Income of $67.8m, +4951% due to disposal gains of US$34.8m and $22.4m of FX& Derivatives fair value gains. Overall gross Margins improved slightly QoQ to 17% from 16% qoq, helped by subsea gross margins which improved to 15%, up from 12% in 2Q12, while vessel utilisation improved to 70%+ from 60%+ in 2Q12. Strong rev due mainly to commencement of new subsea projects awarded after Ezra’s acquisition of AMC Grp last yr. Grp’s offshore support services division, added US$39.4m to the increase in rev due to addition of 2 PSVs and 1 AHTS to grp’s fleet. Grp also announced sizeable contract wins of approx. US$164m, consisting of offshore support services contracts worth a US$87m and TRIYARDS (Ezra’s integrated engineering, ship construction and fabrication services arm) clinching a US$77m contract to build a specialized offshore unit. Going forward, grp expect AMC’s rev to be lumpy in the next 2 to 3 qtrs due to the nature of project execution and rev recognition but expect operations to remain profitable, tipping subsea dev and ongoing E&P work in O&G fields to drive demand for grp’s services. We note that overall, grp’s net Gearing is a tad high at 102%, although this is somewhat mitigated by an interest coverage of 4.7x. Grp currently trades at 9.8x FY12E P/E vs historical average of 14.7x. Ratings as follow: Deutsche maintains Buy with $1.44 TP. CIMB maintains OutPerform with $1.38 TP.