Ezra has traded downwards for the past 2 days on poor earnings result. Today we have seen it touched a low of 0.88 level before bouncing up from that support. Support at 0.88 is a critical level to watch as it was supported very well in June last month and June last year 2012. If the support at 0.88 does not hold we can see Ezra go down further to 0.85 and finally 0.800 level. Possible to accumulate CFD Short positions on this breakdown of support. On the market depth currently, there are about 1.3m shares on the bid at 0.88 which shows there buyers are out to hold that level. However, if sellers were to start throwing down fast and hard at this level, be prepared for more short term downside. Those considering to long can consider accumulating on dips if Ezra dips near the 0.800 support for a technical rebound.
Buy stop at 0.915 for Sell trades
DMG – 16 JULY 2013
OCBC – 15 JULY 2013
Ezra Holdings: Time needed for subsea to deliver sustainable earnings
Summary: Ezra Holdings (Ezra) reported a 19% YoY rise in revenue to US$317.1m but saw a 68% drop in net profit to US$7.2m in 3QFY13, such that 9MFY13 revenue and net profit accounted for close to 75% of our full-year estimates. However, stripping out one-off items, we estimate core net loss of US$54m for the quarter. Gross profit margin was only 1% vs. 17% in 3QFY12. The main reason for the poor performance was the subsea segment, which went into the red with delays in project executions and unforeseen costs. As highlighted in our earlier reports, we have been waiting for evidence of smooth execution in this business before we turn more positive on the company. In view of the lack of sustainable core earnings for now, we value Ezra using a P/B of 0.7x, such that our fair value estimate drops from S$1.10 to S$0.99. Maintain HOLD. (Low Pei Han)
Summary: Ezra Holdings (Ezra) reported a 19% YoY rise in revenue to US$317.1m but saw a 68% drop in net profit to US$7.2m in 3QFY13, such that 9MFY13 revenue and net profit accounted for close to 75% of our full-year estimates. However, stripping out one-off items, we estimate core net loss of US$54m for the quarter. Gross profit margin was only 1% vs. 17% in 3QFY12. The main reason for the poor performance was the subsea segment, which went into the red with delays in project executions and unforeseen costs. As highlighted in our earlier reports, we have been waiting for evidence of smooth execution in this business before we turn more positive on the company. In view of the lack of sustainable core earnings for now, we value Ezra using a P/B of 0.7x, such that our fair value estimate drops from S$1.10 to S$0.99. Maintain HOLD. (Low Pei Han)
Phillip Securities – 15 JULY 2013
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