Ezra

Ezra: Co. could be considering an issue of S$-denominated non-dilutive perpetual capital securities, following in Ezion’s recent footsteps. No details have been disclosed but CIMB believe the size could be US$100m-120m, likely a hybrid security. Proceeds could be used for debt repayment, working capital and longer-run capex.

The exercise could reduce its net debt ratio to 0.7x (from 0.9x) and add to its earnings from lower interest expense. However, free cash flows could be affected by the high coupon rate (estimated at 6-8%). Shares are trading at 7x CY12 P/E, below the 5-year smallmid- cap average of 11x. CIMB maintains O/p with $1.55 TP. Continue to see catalysts from subsea contract wins and recovering quarterly results.