Ezra

Ezra: After its weak 3QFY13 results, DB noted that if not for a 141% increase in other operating income, the group would have delivered sizeable losses for the quarter. DB believe the execution risks are not over for Ezra and expect a challenging six to nine months ahead. Ezra indicated that the weakness was due to higher-than-expected costs at the project level in 3Q13, due to delays in project execution and the recognition of additional costs that were unexpected for certain projects. The total group order backlog stands at about US$2.5b. While Ezra’s new order intake is healthy, the focus should be on its profit conversion ability and, DB think it may be too early to turn positive at this stage. Broker recommendations: DB cuts earnings by 25-45% (~35% below the street for FY14e), downgrades Ezra to SELL with TP of $0.70; UOB Kay Hian also downgrades to HOLD rating with TP of $1.07;