Ezra

Ezra: FYAug11 results. Topline above consensus, but net profit slightly below.

4Q revenue at US$220m, double yoy, +33% qoq.
4Q net profit at US$12.4m, -42% yoy, but +88% qoq, largely due to higher other operating income.

Full year revenue at US$559m, +58% yoy, with growth across the Offshore Support Services Division, Marine Services Division and Subsea Services Divison.
a) The increase in revenue from Offshore Support Services Division was mainly due to the contribution from 6 new Platform Supply Vessels and 4 AHTS vessels.
b) The increase in revenue from Marine Services Division was mainly due to an increase in procurement and eqpt supply and engrg activities.
c) The increase in Subsea Services Division was due mainly to inclusion of operations of a vessel delivered in FY10 and maiden contribution by the newly acquired AMC Group.
Full year net profit at USS$40.4m, -47% yoy.

Gross margins continued to fall to 13.7% in 4Q11, vs 16.9% in 3Q11, and 29.8% in 4Q10, largely due to the lower margin AMC. The silver lining is that absolute gross profit rose to US$30.1m vs US$27.8m in 3Q11, which may suggest that AMC is starting to see some improvement.

Other operating income remains lumpy, and was up 72% yoy for 4Q11, mainly due to a one-off gain on disposal of fixed assets and gain on dilution of interest in associated companies, which offset the larger FX loss of US$4.3m (vs loss of US$0.8m in 4Q10), and decrease in fair value gain on derivative instruments.

The group is cautiously optimistic on the outlook of the sector over the next 12mths, says demands for medium to large sized offshore support vessels are expected to continue to be good.

No dividends declared for this yr, vs 1.5cts last yr.

Stock trades at 16.5x P/E, 0.8x P/B at the last close of $1.
Pre-results, the Street had already lowered expectations for Ezra. CIMB cut TP to $0.80 from $1.55, DnBNOR cut TP to $1.20 from $1.45.