Picked up a call from that beefy barber. Says he is scared, now that he knows Ezradoesn't make Ezlink cards.....haha..he is one cute fellow. Anyway, that barber ( beginning to do some research AFTER buying into the stock) sent us this article below. Take note that this article was published in Aug 2007 with analysis from DVB Bank,an international advisory bank and finance house that specializes in the global transport market and they speak about oversupply especially when oil prices head south.Just food for thought!
Dearest Barber, pls do the proper research next time before investing your money or you will have to cut hair till you grow old...
I m jus reading and find this interesting blog....simple 2 understand, fact & data...keep it up. nice work. Just wonder r u a group of bloggers or simply OMO ??? always mention "we" in your earlier posts...
ReplyDeleteWe are a 3 person team...monkey, artist and me. Calefare are the beefy barber and of cos more calefares to come....
ReplyDeleteGlad you find this blog interesting!
Perhaps you would do well to consider the fact that Ezra and Jaya's target segment of the offshore market are differen.
ReplyDeleteEzra's strategy is to diversify into activities along the span of the offshore exploration, construction and production industry.
Core difference is that Ezra has moved one-step ahead of Jaya by entering the higher-end offshore construction segment with higher specs pipelaying accom barges as well as MFSV/MPSSVs which are more sophisticated than general offshore support vessels (OSVs) that Jaya and many many others specialise in. In addition Ezra has also moved into self-propelled jack-up rigs for drilling and the world's largest Gas FPSO for a niche S.E.A. market. Both of these work on Long-Term contracts (>5 years) with stable earnings of a lucrative margin locked in. Jaya is not present in both these higher end niche market sectors at present and even if they were to move into it, it would take a good lead time of at least 2 years. By which time, many others would have joined the party driving the demand and hence profit potential down.
Also take note that a significant proportion of Jaya's profit comes from the sales of vessels, which is no surprise given that Jaya is also a shipbuilder. However, given the coming oversupply of OSV tonnage (a segment where Jaya Shipbuilding specialises in), we are not likely to see as high a earning potential from this stream of income in the coming years. To support my statement, it is no secret that shipping asset prices are softening and production costs are rising hence margins in shipbuilding, sales of OSVs will soften, thereby likely to reduce Jaya's earnings in the coming years.
Ezra in comparison does not make a business from selling issets, rather it generates income from the employment of its assets. Although there have been a number of sales-and-leaseback which lighten its balance sheet, it still continually generates a steady income from these vessels/assets.
Hence, scrutinising the business models of both companies, it would not be unreasonable to say that Ezra's financial performance will be weaker than Jaya's in time to come.
This is of course my 2-cents worth from working in the industry and analysing the nature of both company's activities.
My apologies, statement extracted from above comment should read
ReplyDelete"
Hence, scrutinising the business models of both companies, it would not be unreasonable to say that Ezra's financial performance will necessarily be weaker than Jaya's in time to come.
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Hi marine freak,
ReplyDeleteThat was very informative. Understand that in the future, oil will have to be increasingly drilled in deeper offshore regions and based on your comment above, Ezra does seem to be poised well for the future compared with Jaya or its other competitors due to more sophistication.
That said......but nevertheless we are definitely staying right out of this counter or this sector for sure at least for the next 1 year or so.