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Could Ezion Holdings Gush Value In The Oil & Gas Services Sector?

ezionOil & Gas Equipment & Services stocks covers companies that manufacture and provide supplies and services to other businesses that are involved in the drilling, evaluation and completion of oil and gas wells. There are 31 quoted companies on the Singapore Exchange.

One company previously looked at and, which still arguably represents good value with a PE of three and price to book ratio of 0.4, is Swiber Holdings Limited (SGX: AK3). However, Swiber is not necessarily the be-all-and-end-all for the industry in terms of value.

Ezion Holdings (SGX: 5ME), with a market capitalisation of over S$2.7 billion, is the largest of the Oil & Gas Equipment & Services Stocks. It operates in Singapore, Australia, Europe and the Far East and ASEAN countries.

Ezion is involved in the servicing, commissioning, maintaining and decommissioning wells. While the company’s earnings multiple of around 10 is below the market average of 14, it is trading at twice its book value. Additionally, it does not pay a dividend, which is unlikely to appeal to value hunters.

Falcon Energy Group (SGX: 5FL), which is capitalised at S$335 million, is a mid-sized player within the industry. It trades at a tasty earnings multiple of 4.4 and pays a dividend. The yield is just under 5%. It is also priced at close to its book value.

In common with Swiber, Falcon is sitting on net debt. However, the level of borrowings does not appear to be onerous and the interest repayments are well within the company’s means. Further assurance that the company could meet its debt obligations comes from a recent jump in top-line sales and bottom line profits.

One of the smallest companies in the sector is Heatec Jietong Holdings (SGX: 5OR). The company trades at only 2.4 times earnings and boasts a dividend yield of 5.6%, whilst being priced at only 0.4 times the book value.

Could Heatec Jietong represent value? It could but it is worth bearing in mind that Heatec’s bottom-line profits can be a little erratic. That is not ideal, when the company has debt on its books, which represent over 80% of the company’s value.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.