Why Ezion's Pelita Bara Samudera stake buy won't boost earnings

Group’s 3Q16 is likely to be lacklustre.

Ezion Holdings is just treading water with its acquisition of 49% stake in Indonesia’s PT Pelita Bara Samudera (PBS) as the foreign shipping company currently has only one tanker in its inventory.

According to OCBC, the purchase of PBS has little impact on Ezion’s earnings. The group’s share of the estimated profit from PBS is not significant compared to Ezion’s current yearly net profit. As such, OCBC expects Ezion’s 3Q16 to be a lacklustre one for the group.

Ezion seeks to strengthen foothold in Indonesia through the acquisition of PBS that was previously owned by Quvat Group.

Established in 2007, PBS was formerly in the dry bulk shipping business but it had sold three bulkers for US$3.5m each to Chinese buyers, after revealing that contract rates on offer by Indonesian clients do not justify its continued presence in the dry sector. The vessels had been used by PBS to service a long-term contract of affreightment with power producer PT Jawa Power that ended in Oct 2015.

The Indonesian company is now shifting its attention to the tanker segment.

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