Ezion Holdings - OCBC Investment 2016-10-18: Monitoring PEMEX

Ezion Holdings - OCBC Investment 2016-10-18: Monitoring PEMEX EZION HOLDINGS LIMITED 5ME.SI

Ezion Holdings - Monitoring PEMEX

  • With regards to the three drilling rigs under the Ezion-Swissco JV, Strategic Offshore, there have been concerns about the charterer’s ability (end client is PEMEX) to pay on time since the oil price plunge. 
  • Ezion had also previously highlighted that the group has been experiencing difficulties obtaining payments from clients, and it was also reported in the media that PEMEX has been dragging its feet on payments to contractors and suppliers. As a result, there is a risk that provisions on receivables and the JV (NAV: US$107.9m as at Dec ‘15) could be incurred in the coming quarters, but we also note that PEMEX earlier this month has successfully placed some US$3.95b in bonds to help address its financial needs for 2017; the offering was 2.2x oversubscribed. 
  • In Sep, PEMEX also completed a US$1.1b sale of its stake in a pipeline operator, following which we could see more asset sales. 
  • Maintain HOLD with S$0.35 fair value estimate on Ezion.

Low Pei Han CFA OCBC Investment | http://www.ocbcresearch.com/ 2016-10-18
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 0.35 Same 0.350