Ezra

Ezra: Ezra’s cash call has lifted its refinancing risks. However, its high gearing of 1.27x amidst the current industry downturn and a high cost structure make the situation challenging.
A possible sale and leaseback of the Lewek Constellation would unlock US$200m in equity to bolster internal liquidity. On the flipside, the high vessel dayrate will add to cost burden. Subsea outlook has deteriorated.
UOB Kay Hian maintains its HOLD rating with revised cum-rights TP of $0.31 (prev. $0.54) (ex-all $0.175). Entry price is $0.13 (ex-all). The house also revised their P/B valuation yardstick to 0.3x 2016F P/B from 0.5x 2016F previously given the marked deterioration of the subsea industry in the last quarter. Ezra’s 1-year forward P/B bottomed at 0.26x during the Great Recession in 2008/09 which sae Brent oil pricing falling below US$40/bbl. The OSV-owner segment bottomed at 1-year forward P/B of 0.5x during the crisis.