CIMB neutral on Ezra's plan to list Triyards unit

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 1.38

CIMB is neutral on Ezra’s plan to list its Triyards unit on SGX as the division only contributes 3%-4% of the company’s earnings.

“The listing of Triyards is unexpected, but it raises the prospect of fund-raising at a later stage. There are pockets of growth opportunities, especially in Brazil where fabrication capacity is in demand. However, this may require capital injection, which Ezra may not be able to fund given its own stretched balance sheet.”

It views the dividend-in-specie distribution route, offering one Triyards share for every ten Ezra shares held, as the best option given the choppy equity market, speeding up the listing process. It adds, this could be the only dividend Ezra shareholders receive for FY12 as the group may not make further distributions.

CIMB keeps its EPS estimates unchanged as the minority interest dilution is minimal. It keeps an Outperform call with $1.38 target.

“We see catalysts for the stock from stronger-than-expected subsea profits and recovery in the offshore division.”

The stock is up 2.4% at $1.065.