<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Ezra hits out at Citigroup analyst's 'high-risk' rating
</TR><!-- headline one : end --><TR>Energy firm disputes claims by analyst who branded it 'a sell' </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Robin Chan
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->ENERGY firm Ezra Holdings has hit back at a Citigroup analyst report that branded the firm 'a sell' and 'high risk'.
Ezra told the Singapore Exchange yesterday that it disputed claims made by analyst Rigan Wong after the firm released its full-year earnings earlier this week.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>It rejected the criticism that it provided poor earnings guidance, saying that 'a quick check with a couple of analysts showed that they are comfortable with the guidance given by management'. It added that its investor relations contacts respond 'as quickly as they can to all investor queries'.
</TD></TR></TBODY></TABLE>Recurring net profit was up 124 per cent at US$49.9 million, (S$75 million) while revenue grew 87 per cent to US$268.3 million from US$143.5 million the previous year.
Mr Wong wrote about the firm's 'exceptionally weak fourth quarter' and advised investors to sell - the only one of 12 analysts tracked by Bloomberg to make such a recommendation. He also gave the offshore and marine services provider a high-risk rating.
The Oct 22 report stated that recent poor results, possible earnings estimate cuts by analysts, poor guidance and disclosures, dependence on debt, and less robust industry fundamentals made for a poor investment thesis.
Ezra hit back in a two-page statement yesterday.
It rejected the criticism that it provided poor earnings guidance, saying that 'a quick check with a couple of analysts showed that they are comfortable with the guidance given by management'.
It added that its investor relations contacts respond 'as quickly as they can to all investor queries'.
Ezra also attacked the Citigroup claim that its profit was obtained only after 'filtering through a long list of one-off items'. The company said that 'there are only six detailed breakdowns to our exceptional items which, we believe, cannot be described as a 'long list' as referred to in the report'.
It also disagreed with Mr Wong's analysis that the firm's provision for foreseeable losses of US$3.1 million and the loss on the disposal of vessels held for US$2.8 million were due to cost inflation at shipyards being passed on to the company.
The firm reiterated that those losses were due to exchange rate shifts that made construction costs more than the original contracted sale price from two years ago. It said this had been explained at its results announcement.
Mr Wong's report also claimed that Ezra's management highlighted that a number of its bankers were trying to invoke a market disruption clause on its long-term capital expenditure financing.
If this went through, it would raise funding costs by 'less than 200 basis points', leading to financing challenges.
Ezra countered this, saying that 'most of its bankers have not indicated any intention to invoke the market disruption clause'; therefore, any rise in funding costs would not be across the board. The Straits Times understands that 'one or two' bankers have indicated they may invoke this clause.
With regard to rates on renewal charters, Mr Wong wrote that the 10 to 15 per cent higher average rates announced by Ezra were below the rates secured by its competitors. But Ezra insisted that its rates are 'in line with the industry norm', and that Mr Wong had incorrectly compared its mix of vessels with a competitor's specific vessel.
Citigroup slashed its target price for Ezra to 55 cents from 80 cents. In contrast OCBC rated it a buy, cutting its target price from $2.50 to $1.25.
Mr Wong declined to comment on Ezra's response. Ezra shares closed five cents down at 44 cents yesterday. [email protected]
</TR><!-- headline one : end --><TR>Energy firm disputes claims by analyst who branded it 'a sell' </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Robin Chan
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->ENERGY firm Ezra Holdings has hit back at a Citigroup analyst report that branded the firm 'a sell' and 'high risk'.
Ezra told the Singapore Exchange yesterday that it disputed claims made by analyst Rigan Wong after the firm released its full-year earnings earlier this week.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>It rejected the criticism that it provided poor earnings guidance, saying that 'a quick check with a couple of analysts showed that they are comfortable with the guidance given by management'. It added that its investor relations contacts respond 'as quickly as they can to all investor queries'.
</TD></TR></TBODY></TABLE>Recurring net profit was up 124 per cent at US$49.9 million, (S$75 million) while revenue grew 87 per cent to US$268.3 million from US$143.5 million the previous year.
Mr Wong wrote about the firm's 'exceptionally weak fourth quarter' and advised investors to sell - the only one of 12 analysts tracked by Bloomberg to make such a recommendation. He also gave the offshore and marine services provider a high-risk rating.
The Oct 22 report stated that recent poor results, possible earnings estimate cuts by analysts, poor guidance and disclosures, dependence on debt, and less robust industry fundamentals made for a poor investment thesis.
Ezra hit back in a two-page statement yesterday.
It rejected the criticism that it provided poor earnings guidance, saying that 'a quick check with a couple of analysts showed that they are comfortable with the guidance given by management'.
It added that its investor relations contacts respond 'as quickly as they can to all investor queries'.
Ezra also attacked the Citigroup claim that its profit was obtained only after 'filtering through a long list of one-off items'. The company said that 'there are only six detailed breakdowns to our exceptional items which, we believe, cannot be described as a 'long list' as referred to in the report'.
It also disagreed with Mr Wong's analysis that the firm's provision for foreseeable losses of US$3.1 million and the loss on the disposal of vessels held for US$2.8 million were due to cost inflation at shipyards being passed on to the company.
The firm reiterated that those losses were due to exchange rate shifts that made construction costs more than the original contracted sale price from two years ago. It said this had been explained at its results announcement.
Mr Wong's report also claimed that Ezra's management highlighted that a number of its bankers were trying to invoke a market disruption clause on its long-term capital expenditure financing.
If this went through, it would raise funding costs by 'less than 200 basis points', leading to financing challenges.
Ezra countered this, saying that 'most of its bankers have not indicated any intention to invoke the market disruption clause'; therefore, any rise in funding costs would not be across the board. The Straits Times understands that 'one or two' bankers have indicated they may invoke this clause.
With regard to rates on renewal charters, Mr Wong wrote that the 10 to 15 per cent higher average rates announced by Ezra were below the rates secured by its competitors. But Ezra insisted that its rates are 'in line with the industry norm', and that Mr Wong had incorrectly compared its mix of vessels with a competitor's specific vessel.
Citigroup slashed its target price for Ezra to 55 cents from 80 cents. In contrast OCBC rated it a buy, cutting its target price from $2.50 to $1.25.
Mr Wong declined to comment on Ezra's response. Ezra shares closed five cents down at 44 cents yesterday. [email protected]
