Ezion Holdings

Rising up to a new league

Vote of confidence.

confidence to Ezion with a proposed subscription of new shares in the

latter. Other than providing financing, we believe that EDBI could open

gateways for Ezion to secure more contracts from prominent oil and

gas players, given its extensive network. Reiterate BUY and with target

price lowered to SGD1.81 as we adjust for dilution from new shares.EDB Investments (EDBI) has given its vote of

Financing is secured.

announced projects have been secured. Ezion has put in the required

~30% equity and the rest would mainly come from project financing. It

has utilised about 60-70% of the SGD125m perpetual securities raised.

With the remainder of its financial resources, we estimate that Ezion

can take on another two USD80-90m type service rig contracts.

Following EDBI’s proposed investment, Ezion will have additional equity

of SGD18.9m, and with better cashflows next year, Ezion will have

greater capacity to take on more projectsWe highlight that financing for Ezion’s

Prelude to more contract wins.

financing before announcement of any contracts. We view EDBI’s

investment in Ezion not only as a positive sign of endorsement but also

as a prelude to more contract wins.Traditionally, Ezion secures its

Mexican wave rising.

Keppel and Sembcorp Marine securing jackups built to work for

Mexican NOC, Pemex. The last two service rig contracts secured by

Ezion were also for the latter, reflecting Pemex’s aggressive drive in

offshore activities. Given Ezion’s good track record with Pemex (5

secured contracts), this could be a channel where new contract wins

would come from in the near term.Recent offshore orders wins saw rigbuilders,

Potential for earnings upgrade.

Ezion would continue to deliver in 2013 with more contract wins. We

lower our TP to SGD1.81, which is pegged to 10x FY13F PER, as we

account for dilution from new shares. However, we see room for

earnings upgrade as Ezion announces more contract wins in FY13F.

Reiterate BUY.We are increasingly confident that

Ezion Holdings – Summary Earnings Table

FYE Dec (USD m) 2010 2011 2012F 2013F 2014F

Revenue 117.1 107.0 172.8 394.3 478.6

EBITDA 47.7 62.0 92.5 175.0 211.6

Reported Net Profit 40.2 58.1 81.9 146.1 180.3

Recurring Net Profit 10.5 58.1 65.9 136.4 170.5

Basic EPS (US cts) 5.6 8.1 9.6 16.3 20.1

EPS Growth (%) 135.0 44.5 18.2 69.1 23.4

DPS (SGD cts) 1.0 1.0 1.0 1.0 1.0

PER (x) 21.4 15.3 12.9 7.6 6.2

EV/EBITDA (x) 23.4 18.6 16.5 10.1 8.0

Div Yield (%) 0.6 0.8 0.8 0.8 0.8

P/BV(x) 4.2 3.3 1.8 1.6 1.3

Net Gearing (%) -36.0 35.2 81.3 100.0 72.3

ROE (%) 19.2 21.7 14.2 20.7 20.8

ROA (%) 10.1 12.4 7.0 9.2 10.6

Consensus Net Profit (USD m) 64.0 127.7 166.5

Source: Company, Maybank KE estimates