Ezion has seen a slight pull back on a weak overall market. Support currently at 2.20 then 2.23. As long as this immediate support level holds, can consider accumulating on dips for a rebound back up. Resistance stands at 2.40 which it broke above last month but failed to maintain above. More upside to be seen to 2.50 if the 2.44 clears.
Stop loss at 2.18
DBSV – 6TH June 2013
Ezion: BUY; S$2.25; EZI SP
Sky's the limit
Price Target : 12-Month S$ 3.00 (Prev S$ 2.52)
by: HO Pei Hwa
• Raising FY14/15F earnings by 3/15% after imputing an additional 4/8 vessels to fleet
• Poised to ride on the rising demand for liftboat/service rigs in Asia and robust activities in GOM
• High earnings visibility with impressive EPS CAGR of 56% in FY12-15F
• Maintain BUY, TP raised to S$3.00
Ample room for growth. We revisited our earnings model for Ezion in an attempt to estimate its growth potential beyond its existing fleet and FY14. In our base case scenario, Ezion could add a further 4 vessels to its fleet during the rest of FY13 and another 8 in FY14 if it gears up to 1.3x, resulting in a 3/15% increase in our FY14/15F core earnings . Our recurring 3-year EPS CAGR will rise from 49% to 56%. There is room for further upside to our revised numbers from JV projects, sales & leaseback and equity raising exercises, which we have not factored in yet.
Fast growing international footprint. As a relatively young player that started off in 2007, Ezion has made a significant breakthrough by securing liftboat/service rig contracts from national and independent oil companies for offshore Malaysia, Indonesia, Brunei, Myanmar, Vietnam, India, Middle East, and even as far as Denmark and Mexico. Given the low penetration rate of liftboats in Southeast Asia, Ezion is well positioned to ride the potential rising substitution for liftboats and service rigs over workboats in the region. In addition, its strengthening ties with Pemex would allow Ezion to tap into the robust offshore activities in GOM.
BUY with a higher TP of S$3.00. We like Ezion’s unique business model that offers fascinating growth and high earnings visibility supported by long term contracts of 3-5 years. Ezion deserves to trade above the average of its small-mid-cap O&G service provider peers (10x PE) and closer to its 5-year peak of 19x. Hence, we are lifting our valuation peg from 12x to 14x, on revised blended FY13/14F recurring EPS, to arrive at a higher TP of S$3.00. Maintain BUY.
Sky's the limit
Price Target : 12-Month S$ 3.00 (Prev S$ 2.52)
by: HO Pei Hwa
• Raising FY14/15F earnings by 3/15% after imputing an additional 4/8 vessels to fleet
• Poised to ride on the rising demand for liftboat/service rigs in Asia and robust activities in GOM
• High earnings visibility with impressive EPS CAGR of 56% in FY12-15F
• Maintain BUY, TP raised to S$3.00
Ample room for growth. We revisited our earnings model for Ezion in an attempt to estimate its growth potential beyond its existing fleet and FY14. In our base case scenario, Ezion could add a further 4 vessels to its fleet during the rest of FY13 and another 8 in FY14 if it gears up to 1.3x, resulting in a 3/15% increase in our FY14/15F core earnings . Our recurring 3-year EPS CAGR will rise from 49% to 56%. There is room for further upside to our revised numbers from JV projects, sales & leaseback and equity raising exercises, which we have not factored in yet.
Fast growing international footprint. As a relatively young player that started off in 2007, Ezion has made a significant breakthrough by securing liftboat/service rig contracts from national and independent oil companies for offshore Malaysia, Indonesia, Brunei, Myanmar, Vietnam, India, Middle East, and even as far as Denmark and Mexico. Given the low penetration rate of liftboats in Southeast Asia, Ezion is well positioned to ride the potential rising substitution for liftboats and service rigs over workboats in the region. In addition, its strengthening ties with Pemex would allow Ezion to tap into the robust offshore activities in GOM.
BUY with a higher TP of S$3.00. We like Ezion’s unique business model that offers fascinating growth and high earnings visibility supported by long term contracts of 3-5 years. Ezion deserves to trade above the average of its small-mid-cap O&G service provider peers (10x PE) and closer to its 5-year peak of 19x. Hence, we are lifting our valuation peg from 12x to 14x, on revised blended FY13/14F recurring EPS, to arrive at a higher TP of S$3.00. Maintain BUY.
No comments:
Post a Comment