$$$ KPO and CZM $$$: Bleeding Stocks - Ezion [Part 3]

Friday, August 25, 2017

Bleeding Stocks - Ezion [Part 3]

This is the third and final series of "Bleeding Stocks" where KPO will be looking at 老鼠屎 (rat shit) dragging down the overall performance of his portfolio. Do check out the rest if you have not :)

Bleeding Stocks - QAF [Part 1]
Bleeding Stocks - Raffles Medical [Part 2]

I was wondering if I should rename this to dead stock instead of bleeding when Ezion made an announcement to suspend trading. lol.

Based on the last closed/suspended price, that is a -68% loss! I am guessing it will be even more when Ezion resumes trading. How did KPO even end up in this state? He was once a clueless investor that did not have any investing/financial knowledge and made many mistakes along the way.

This is a record of my past transactions. There was a bonus issue of 1 for 5 stocks, hence the free 200 shares on 18th Sep 2014. The above shows that I was trying to average down but ended up catching a falling knife >.< This was one of the stocks which I had bought simply based on banks' analysts' reports when I first started out.

i3investor.com used to be one of my favourite sites to hang out. It provides a list of analysts' reports, their target price, possible upside/downside and other information. If you were to head over to Ezion page, it will look like below:

The average target price is $0.44 and there is a possibility of it increasing by 123.35%! KPO, do not give up hope! Let me continue to deceive myself, I have yet to look at its last quarter earnings/report. lol.

Let me bring you back to the past, to the year of 2014 where I first bought this stock to show you what I was looking at. When people say what is on the internet stays on the internet, it is pretty true. Introducing the WayBackMachine which lets you travel back in time on the internet given an URL. You can try using it on facebook/google to see how they looked when they first started.

Welcome to 2014 where the whole world is making "BUY" call on Ezion. lol. Do note that this is before the oil price tumbles. Let's travel to 2015 now.

The price has already fallen to $0.69 and the oil price was at a 10/11 years low but the analysts are still making "BUY" call with target price > $1!

Enough time traveling, let's come back to reality where Ezion just reported its second quarter on 14th August 2017, 7am and 30 minutes later, request for trading suspension before the market opens. Well played.

The latest update on 23rd August 2017 states that it is "arranging a series of informal meetings with its lenders and holders of securities issued by the Company pursuant to its S$1,500,000,000 Multicurrency Debt Issuance Programme"

Looking at its balance sheet, Ezion has US$2,910,775,000 of total assets and US$1,609,835,000 of total liabilities. Given that there are 2,073,843,405 shares in the market, its NAV is US$0.6273 and S$0.85  (assuming an exchange rate of 1 USD = 1.36 SGD). Ignoring the fact that its EPS has been negative since 2016, it is currently trading at a PB of 0.232, isn't that a huge discount?! Anyone interested in joining me to become a shareholder? lol. I hope not. Simply looking at the PB ratio does not give a sufficient context.

A good example would be Rickmers Maritime which has wind up the business and liquidated its assets to repay the debts. It has a NAV of US$0.21 based on its 2016 annual report (the total asset of US$531,862,000 and total liabilities of US$348,389,000). However, the assets are usually not liquidated/sold at book value (usually at a significant discount). As a result, the bondholders got back a small amount (12% of capital) while the shareholders lost everything.

What is more worrying apart from its huge amount of debts is that its operating cash flow has gone negative this quarter. This means that the business is no longer making sufficient money just to be operational, not to mention paying off debts. Hence, the need to suspend the stock for further discussion.

On the bright side, Ezion has not defaulted on any of its loans unlike Erza, Swiber, etc and its CEO/founder Chew Thiam Keng has never sold any shares since 2014 but continued to buy more/average down over the years. His last purchase was 500,000 shares at $0.22 on 31st August 2016; 500,000 shares at $0.235 on 30th August 2016 and 500,000 shares at $0.255 on 22nd August 2016, $0.29, $0.602 and more. He is currently holding on to 217,583,440 shares (10.49%) and he certainly has a lot more to lose (based on last closed price, that is S$43 million) as compared to my 9,900 shares. lol.

KPO will not be showing any chart. $0.197 is already at an all time low and that is a very weak support that will definitely be broken >.<

CZM has been asking me to sell but I continued to hold on to it hoping that one day something magical will happen. After all, cutting loss is easier said than done. What would you do?


  1. I had a similar predicament as you years ago. The stock in question was ZIWO i bought it at 0.4 well I cut loss at 0.14. It was a great move after all. The cash was redeployed into a company worth investing in. The longer you hold onto it the more opportunity cost lost

    1. Hi Evilbdboi,

      Thanks for sharing your experience, glad that it turn out well for you in the end. I like your last statement :)

  2. hi,
    share with u lor,
    bought chartered semi com donkey years ago around $16 plus sold around 30c . sad...

    1. Hi Justin,

      That sucks! I could not find much information on it but it seems that Temasek lost a lot from it too.