“The risk of the operational recovery slipping into late 2H17 is high, as the situation on the ground is fraught with uncertainties,” says analyst Foo Zhi Wei in a Monday report,
“The fluidity of the situation renders any guidance out of date in a matter of weeks, and we are concerned that the current guidance will change again in the coming quarter.”
As forewarned, Ezion reported a headline net loss of US$12.7 million for 1Q17. Excluding the forex loss of US$13.3 million, core earnings reported a barely profitable quarter of US$0.5 million.
“The weak 1Q17 came in within our expectations, as we had anticipated a 1Q17 comparable to 4Q16 before the start of its operational ramp-up in 2Q17,” says Foo.
“The weaker core earnings in 1Q17 was due to a 16.4% y-o-y decline in revenue as the number of vessels fell by one to 14 vessels.”
But Ezion still managed to main a robust EBITDA margin of about 59% despite the weak bottom-line results.
The group’s net gearing went up to 100% due to currency translations and the lower equity base. According to Foo, Ezion made a net debt repayment of US$21.7 million in 1Q17 and management intends to continue paring down debt over the coming quarters.
Shares of Ezion are currently trading at 30 cents.
