CIMB - SIN: Ezion Holdings Limited - Good returns; more surprises to come

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 1.22

	16 Jun 2011 Singapore
Quick Takes
Ezion Holdings Limited [ PDF]
Good returns; more surprises to come -
(EZI SP / EZHL.SI, OUTPERFORM - Maintained, S$0.65 - Tgt. S$1.22, Offshore & Marine)
Atlantic Labrador (Atlantic), a 50:50 JV between Ezion and Treatmil, has secured a US$73m contract for four years to provide an accommodation jack-up to a European oil major. Although rig conversion jobs would appear to mark a diversification from Ezion's core liftboats business, we note that there are synergies between the lifeboat and rig conversion businesses as expertise required is similar. Besides, return on equity for such jobs are attractive. Incorporating this project, partially lessened by work stoppage for a 2,000 dwt PSV operating in South America, we adjust our earnings estimates for FY11-13 by -5% to 5%. Our target price accordingly rises to S$1.22, still based on 11x CY12 P/E (5-year small-mid cap industrial average). Stock catalysts could include on-schedule delivery of liftboats, marine logistics work for Australian LNG projects and more of such rig conversion jobs.

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