Ezra up after contracts, Q1 result

Shares of Singapore oil and gas services firm, Ezra Holdings (EZRA.SI), rose as much as 3.2% on Friday after the company reported US$120 million ($154.5 million) in contract wins and its first-quarter results.

At 9:28 a.m., Ezra shares were up 2.6% at $0.975 on a volume of 4.7 million shares, 1.5 times the average daily volume in the last 30 days.

Ezra said on Thursday it had secured two contracts worth up to US$120 million, bringing the company’s order backlog to a record of around US$1.6 billion.

 

Separately, for its first quarter ended November, Ezra said its revenue jumped 138% from a year earlier to US$180.5 million, though net profit was flat at US$13.3 million.

 

Gross profit margin fell to 19% from 34% a year earlier due to Ezra’s change in sales mix, resulting from the AMC Group’s revenue contribution to the subsea services division.

 

The firm also reported tax expenses of US$2.9 million in its first quarter, mainly due to withholding tax expense incurred by vessels operating in overseas waters.

 

OCBC Investment Research said in a report that Ezra’s subsea division has been building up its orderbook in the past half a year. Compared to an orderbook worth more than US$300 million as at July 14, 2011, the figure has grown to more than US$800 million currently, OCBC said.

 

But Ezra’s net gearing remained at about 1.0 times and this may rise to around 1.3 times in subsequent quarters, OCBC said, adding that Ezra may tap the debt markets for funds this year to avoid dilution on the part of equity holders.

 

“We take into account the group’s short-term debt, capital expenditure plans and an out-of-the-money convertible bond and estimate it would need to prepare at least US$460 million for these purposes,” OCBC said.

 

OCBC maintained its buy rating and $1.36 target price on Ezra stock.