There is probably a lot to dislike about oil services company Ezion Holdings (SGX: 5ME) at the moment, given the market’s worry over crude prices. But that could, ironically, be the first thing to like about the company.
When oil could do no wrong, investors were willing to pay as much as S$200 for every dollar of profit that Ezion made. The valuation today is considerably more modest. At a P/E of around 6, investors would only be paying S$6 for every dollar of profit that the company makes. That could be the first thing to like about Ezion – its valuation.
The company is also highly focussed. That could be the second thing to like about Ezion – it sticks to the knitting. It could stand the company in good stead when oil explorers regain their interest in drilling for the black stuff under the seabed.
As an owner and charterer of strategic offshore assets, it can afford to wait – but preferably not too long. It has net debts of around S$1.5b, which cost it around S$30m in interest payments last year. With oil prices slowly creeping back above US$60 a barrel, an end could be in sight for the rout in crude.
The third thing to like about Ezion is its geographic spread. The Singapore-based company has operations in Australia, Europe and the Rest of Asia. Interestingly, Europe and the Rest of Asia generate the lion’s share of group sales. They account for nearly three-quarters of total revenues.
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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 Director David Kuo doesn’t own shares in any companies mentioned.