$$$ KPO and CZM $$$: Ezion - Bleeding Stopped!

Thursday, April 26, 2018

Ezion - Bleeding Stopped!

I blogged about Ezion a few months back - Bleeding Stocks - Ezion [Part 3] after it was suspended on 8th August 2017. It has resumed trading last week on 17th April 2018, opened at $0.245 and even reached a high of $0.255!

CZM was asking me what would be my plan when Ezion resumes trading. I told her confidently that day 1 will be a bloodshed as I foresee everyone will be dumping and selling their shares. My plan was to hold it, be hopeful and see how things go. Surprisingly, it was beyond my expectation and it actually traded higher! Without any hesitation, I submitted a sell order and sold all of it at $0.225.

Investing in stocks is never easy and one does not always make money. My total capital was $6,167.70 and I am pretty glad that I manage to get back $2,222.26 after ~ 4 years. I lost in total $3,939.30 including commisions which translate to a total loss of -63.9% and an annualized loss of -37.9%! It could have been much worst - the latest closing price is $0.152 on 25th April 2018.

Looking at their 2017 Annual Report, the shares are now worth a lot lesser than it was one year ago. The equity attributed to shareholders is just US$304,826,000 as compared to US$1,315,384,000 partly due to the ridiculously large impairment losses of US$697,322,000 in their Plant and Equipment among other things. Furthermore, the decrease in cash is not proportionate to the decrease in liabilities too!

NAV has decreased by 76.8% from US$0.6343 to US$0.1470 (~SG$0.1940 using an exchange rate of US$1:SG$1.32). Regardless, the US$1.6 billion debt is an exceptionally huge one that will probably stick around its balance sheet for a long time and I am not too optimistic about it with a gross profit of US$1,804,000. Even if Ezion successfully multiplies its gross profit by 10x or even 100x, it will never be the same again.

Screenshot from https://sginvestors.io/sgx/stock/5me-ezion/target-price

Do not make the same mistake as I did when I first started investing 4 years back - buying based on analyst's report recommendation. Look at what DBS has done again with a BUY recommendation and a price target of SG$0.29 where the valuation is done at 1.4x FY2018 PB?! It is just so wrong! After all the drama, why would anyone still value/price Ezion at a premium?

One can either continue to be hopeful or cut loss, take whatever there is now. Assets can be impaired but liabilities will definitely remain. Good luck to the remaining shareholders!

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  1. But this time it is going to be different. I see oil heading for 100$, so now Ezion is safe from creditor for now, it is going to a stock of multi fold gainer. I am waiting for it to go down further before i buy it.

    1. Hahaha. Sure, all the best to you then! How low before you buy? Is today closing price of $0.128 low enough? lol.

  2. Hi KPO,

    Once the bleeding stop, the wound will heal. Once it heals, apart from the scare, the important thing is the lesson!

    Thank you for the indirect lesson. Nonetheless, I believe much of your other holdings are treating your wounds well!

    So no worries !! Hehe :p

    1. Hahaha. Yeah. The wound will heal and a scar will remain but it will be a good reminder/lesson learnt :)