Ezra 1 (May 08 - Dec 09)

[Musicwhiz]

Some news from Energy Current for reading pleasure:-

Ezra wins repeat fabrication and assembly order By Hwee Hwee Tan

5/15/2008 4:34:02 AM GMT

SAIGON, VIETNAM: Ezra Holdings Ltd. was awarded a US$55.4 million repeat order from an undisclosed North American client for the fabrication and assembly of an offshore structure.

Ezra won the deal through Saigon Offshore Fabrication & Engineering Ltd. (SOFEL), a wholly-owned subsidiary of its Vietnam-based offshore fabrication engineering arm, HCM Logistics Ltd.

SOFEL will fabricate parts of a mobile offshore production and drilling support unit as well as handle the final assembly prior to the scheduled project delivery in the second half of 2010, according to sources close to the deal.

In February, SOFEL won a first fabrication and assembly contract worth US$55.4 million from the same client. The latest contract brings HCM Logistics outstanding order book up to US$213.9 million. HCM Logistics now operates fabrication facilities in Ho Chi Minh City and Vung Tau.

[winston]

From DMG:-

Ezra Holdings: A fleet above the rest (INITIAL COVERAGE - BUY\S$2.91\Target S$3.45 )
Serene Lim (62323897, [email protected])

High asset growth profile mapped out to 2010. Ezra is an integrated offshore and marine services
provider with a balanced portfolio comprising of a wide range of vessels to cater to the entire oilfield life cycle spectrum. Its high growth profile is well mapped out to 2010, underpinned by 1 new vessel additions in FY08, 2 in FY09 and 6 in FY10.

Ezra’s successful fleet expansion through an asset-light strategy has led to a well-balanced portfolio of varied offshore support vessels that are able to cater to the entire oilfield life cycle.

Penetration into deepwater E&P offshore support vessel market – future growth driver. Ezra will
be taking delivery of its 5 deepwater Multi-Functional Support Vessels (MFSV) by 2010. These,
together with the 18 Anchor Handling Tug Supply (AHTS) of deepwater capabilities, will position Ezra in good standing to ride on the booming deepwater E&P support vessel market.

Complementary business division. In addition, Ezra’s 2 shipyards in Vietnam, of which Saigon
Shipyard will be fully operational in 3Q08, sets ground for more fabrication, installation and
commissioning projects after 3 recent contract wins worth US$214m.

Initiating coverage with a BUY rating. We value Ezra based on sum-of-the-parts valuation and derive our target price of S$3.45 (upside of 19%). Given the above-average 4-year recurring net profit CAGR of 40%, its prospective FY08F P/E of 22x is not high.

[winston]

From OCBC:-

Ezra Holdings Ltd: Lions in the water

Review of 2Q08 results. Ezra Holdings Limited (Ezra) reported its 1H08 results recently with topline doubling to S$136.7m with bottomline rising 8-fold to S$207.4m. The unusually strong results were largely boosted by disposals gains on EOC share of S$198m though this was offset by
unrealized forex losses of S$12m.

Ezra also factored in a one-off provision of S$19m employee benefit scheme to attract and retain talent. Excluding these one-offs, Ezra reported recurring net profit of S$30.9m.

Recent Petrobras spending spree to drive up AHTS rates. Petrobras has recently earmarked US$112.4b for exploration and production from 2008-2013 with the recent discoveries in the Santos Basin where deep water oil reserves could yield up to 24b barrels. Besides rigs, it heralds a need for about 64 AHTS vessels, 64 platform supply vessels and 18 disaster recovery vessels.

This will further accentuate the supply dearth of deepwater capable AHTS in the world and is expected to drive up both vessel costs and chartering rates. As a gauge, an order placed for a state-of-the-art deepwater AHTS today would only yield delivery in 2.5 years.

Production cycle support vessel securitisation. The focus in the last 2 years has recently been on the record order books of rig builders. However, many have overlooked the spotlight on service providers that support the rig operations. With its young and modern fleet of offshore support vessels, Ezra operates in a space that snugly dovetails the offshore oil and gas development upcycle.

We think that these oil companies that are in the production phase of the cycle will work to secure support vessels at the present charter rates for the next 3-5 years in view of the escalating charter rates. This will translate to stable earnings for Ezra.

Visionary GPS-like positioning. Ezra’s young and modern fleet of AHTS/AHT are well positioned to tap the production cycle of the industry via
1) upward trending chartering rates,
2) expanding offshore support fleet, and
3) focusing on deepwater offshore support.

Resume with BUY. At the current price level, EZRA is a bargain at 6.8x FY08F PER, vs. strong earnings momentum and sustained charter contracts for its offshore vessels. Using SOTP, we have a fair value estimate of S$4.03 for EZRA. We resume coverage on EZRA with a BUY rating. (Kelly Chia)

[winston]

vested

DBS Group Holdings Ltd has reduced its deemed interest in Ezra Hldgs Ltd from 7.56% to 1.36%.

[Musicwhiz]

Hi Winston,

The announcement was as follows (for change in deemed interest):-

DBS Trustee H.K. (Jersey) Limited, a wholly-owned indirect subsidiary of DBS Bank (Hong Kong) Limited, is the trustee of the ASAPH Trust. ASAPH Holdings Limited is the investment holding vehicle of the said trust and holds 40% of the issued shares of Jit Sun Investments Pte Ltd. Following a distribution of trust assets to a beneficiary, DBS Trustee H.K. (Jersey) Limited is no longer deemed to have an interest in the 36,265,920 shares of Ezra Holdings Limited held by Jit Sun Investments Pte Ltd. As a result, DBS Bank (Hong Kong) Limited also no longer has a deemed interest in these shares through DBS Trustee H.K. (Jersey) Limited.

It is a change in deemed interest through distribution of trust assets and not an outright sale to the open market, which probably resulted from a distribution to several beneficiaries (?).

Glad to know you are a shareholder too. Let's share information together on the company and its plans.

[winston]

Hi MW,

Thanks for the kind info. Was so busy today that I did not get a chance to check the SGX website.

Take care,
Winston

[Musicwhiz]

Ezra Holdings Limited (SIN:5DN) to Release Q3 2008 Earnings July 7

Atlanta, GA 6/20/2008 02:10 PM GMT (TransWorldNews)

Ezra Holdings Limited (SIN:5DN) will release the third quarter earnings for 2008 on Monday, July 7. The financial results will be posted on the investor relations section of the company’s website at listedcompany.com/ir/ezra/web.

Ezra Holdings Limited is an offshore support and marine services specialists company. It operates in two divisions. The Offshore support services division is mainly engaged in the owning, chartering and the management of offshore support vessels in serving the oil and gas exploration and drilling industries. The Marine services division is mainly engaged in the provision of management services, supply of marine and gas oil, provision of ship building and engineering works.

As of August 31, 2007, the Company operated a fleet of 26 vessels with operations in South East Asia, India, West Africa, the Middle East, China and Australia. In February 2007, the Company acquired Lewek Champion Shipping Pte Ltd, Lewek Chancellor Shipping Pte Ltd, Lewek Robin Shipping Pte Ltd, Lewek Roller Shipping Pte Ltd, Lewek Ruby Shipping Pte Ltd, Lewek Sapphire Shipping Pte Ltd, Sarah Gold Shipping Pte Ltd and EOC Limited. In April 2007, the Company acquired Gulfstream Management Limited.

[winston]

Hi MW,

Thanks for the kind info.

It would be interesting to watch the price and volume from now to the date of the announcement.

Take care,
Winston

[winston]

No wonder it was moving the last few days, in a weak market.

====================================

Ezra’s EOC delivery of 1st FPSO on schedule – Already chartered out in largest-ever contract

US$400m charter contract for Lewek Arunothai; expected to positively impact earnings from FY09

Vessel is amongst largest gas FPSOs operating in the world

Extends capability in the offshore O&G sector and adds another wave of growth for the Group

SINGAPORE, 24 JUNE 2008 FOR IMMEDIATE RELEASE Ezra Holdings Limited (Ezra, the Group or 以斯拉控股), a leading integrated offshore support and marine services provider in the offshore oil & gas (O&G) industry, announced that its Oslo mainboard-listed associate EOC Limited (EOC) is on schedule to take delivery of its first floating, production, storage and offloading (FPSO) vessel.

The converted 127,540 deadweight tonne Lewek Arunothai further enhances the Group’s fleet capability and has already landed EOC a US$400 million charter contract – its largest to date in value terms. The vessel, contracted to a Southeast Asian oil company, will operate in one of the largest natural gas fields in the Gulf of Thailand.

Said Ezra's Managing Director, Mr Lionel Lee (黎才德): “This three-year contract with an extension option for two years is expected to add positively to our bottomline from FY09. This once again demonstrates the confidence of oil majors in Ezra's capability to provide reliable and high-quality offshore support services for oilfield development and production work.”

“The Lewek Arunothai will be one of the largest gas FPSOs operating in the world and extends the Group’s capability to tap the strong demand from a wider spectrum of the offshore O&G services sector. As record-high oil and natural gas prices galvanise efforts to explore for and develop more reserves around the globe, we expect the FPSO market to stay buoyant and provide another wave of growth for the company.”

Originally an Aframax tanker before its conversion at Keppel Shipyard, the Lewek Arunothai, can export 175 million standard cubic feet of natural gas daily, ranking it amongst the largest gas FPSOs operating in the world.

FPSOs have the advantage of being able to commercially exploit smaller, marginal fields, which are abundant in South-east Asia’s oil and gas producing areas. With oil and gas prices at all-time highs and expected to rise even further, these fields will become increasingly viable to develop. The vessels are also commonly used in deepwater fields, where traditional fixed production platforms face constraints in terms of deployability.

Mr Lee added: “We will continue to offer good value to our customers by maintaining a young, technologically advanced fleet capable of handling deepwater exploration and production work. As more fields move into the production phase, we expect our Production & Construction division under EOC to accelerate Ezra’s growth over the medium term.”

Ezra has been steadily increasing and fine-tuning its fleet to meet the arduous demands of the offshore oil and gas sector. The Group, among Asia’s first to strategically focus on deepwater offshore support work, currently manages 32 vessels and has 9 more scheduled to come into service by 2010.

In April, Ezra reported a set of sterling results for 1H FY08 where its net attributable profit jumped 8-fold to S$207.4 million while turnover doubled to S$136.7 million. It also paid out a special, tax-exempt interim dividend of 5 cents per ordinary share.

[Musicwhiz]

Hi Winston,

This press release was largely anticipated by myself, as the company had previously mentioned that Lewek Arunothai (Lewek FPSO 1 before it was named) was due for delivery in July 2008. Hence, I was anticipating the earnings accretion for EOC Limited. A pity that Ezra only owns 48.9% of the company; there was a point in late 2006 when the company was mulling options for financing this huge capex.

I recall they were contemplating either sale or leaseback, debt financing or listing a subsidiary. They went ahead with the listing of EOC in 2007, and the rest, as they say, is history. With the funds from the divestment of EOC, they have managed to generate the cash required to fund the conversion of the tanker into an FPSO, as well as put the downpayment on the Rolls Royce vessels (delivered in FY 2009) and MFSVs.

Since earnings accretion is already expected, I would prefer to look forward instead - can EOC clinch a second FPSO contract and would it be able to fund it ? Also, how can Ezra as a Group gear up its services to offer a full solution for its customers ? All these should (hopefully) be revealed on July 7 when it releases its results.

A company's strategic focus is very important to me (it's half the battle won); the other half is execution. EOC can leverage up its Balance Sheet as it is now "separate" and de-consolidated from Ezra itself; hence only earnings need to accrue into Ezra's Profit and Loss as a single line, while Ezra's Balance Sheet can be kept "light".

With a 3 to 5 year view, there are significant risks for the company to grow; though opportunities also abound due to the lack of supply of deepwater vessels serving the oil and gas sector. I want to be realistic about Ezra and not be an eternal optimist; hence I do expect some hiccups along the way as it attempts to become a world-class player. But I have my margin of safety and I am not worried; all I need to do it monitor the business (including the 2 yards in Vietnam) and the share price will take care of itself.

Regards,
Musicwhiz